The AUD/JPY currency pair is experiencing sustained selling pressure, marking its third consecutive day of declines and reaching a three-and-a-half-week low during the Asian session on Thursday. The pair is currently trading just below the mid-96.00s, appearing vulnerable to a continuation of this week’s downward trend from the key 200-day Simple Moving Average (SMA).
The Australian Dollar (AUD) received a modest boost from hawkish remarks by Reserve Bank of Australia (RBA) Governor Michele Bullock, who indicated that the board remains vigilant to inflationary risks and does not foresee rate cuts in the near term. However, the positive impact was limited by lackluster Australian Trade Balance data. The surplus increased to AUD 6.009 billion in July, supported by a 0.8% decrease in imports and a 7% rise in exports, but this was insufficient to drive significant gains for the AUD.
Additionally, expectations that the Bank of Japan (BoJ) will implement another rate hike in 2024 are bolstered by data showing a second consecutive monthly rise in real wages in Japan. This ongoing strength in the Japanese Yen (JPY) is further supported by BoJ Board Member Hajime Takata’s comments, which suggested that further adjustments to monetary conditions may be necessary if capital expenditure, wages, and prices continue to rise.
The prevailing cautious market sentiment also enhances the JPY’s appeal as a safe-haven asset, which continues to weigh on the AUD/JPY cross. As a result, the pair’s recent recovery from the 90.00 psychological level appears to have lost momentum, reinforcing the likelihood of a continued downward trajectory.
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