The AUD/JPY pair retraced some of its recent gains during the Asian session on Friday, trading around 96.30. The Japanese Yen (JPY) has edged higher against the Australian Dollar (AUD) following stronger-than-expected real wage data from Japan, which has intensified speculation that the Bank of Japan (BoJ) may implement another interest rate hike before the end of 2024.
Japan’s Labor Cash Earnings increased by 3.6% year-on-year in July, a deceleration from June’s 4.5% rise but still the highest growth rate since January 1997. This figure surpassed market expectations of a 3.1% increase.
The Yen also received a boost from hawkish comments made by BoJ Board Member Hajime Takata on Thursday. Takata indicated that the BoJ might adjust its policy rate in several stages if economic conditions and prices align with forecasts. He noted that while the domestic economy is recovering moderately despite some weaknesses, the BoJ remains optimistic about reaching its inflation target, despite volatility in stock and foreign exchange markets.
On the other hand, the AUD/JPY cross had earlier benefited from positive Trade Balance data from Australia. Australia’s trade surplus widened to 6,009 million AUD in July, exceeding the anticipated 5,150 million and the previous month’s 5,589 million.
Additionally, Reserve Bank of Australia (RBA) Governor Michele Bullock addressed “The Costs of High Inflation” at a Sydney event, emphasizing that it is premature to consider rate cuts. Bullock stated that the RBA does not anticipate reducing rates in the near term, maintaining a cautious stance on monetary policy.
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