The AUD/JPY currency pair has pared its intraday losses, trading around 96.10 during European trading hours on Wednesday. Despite this, the pair may experience sustained losses due to support for the Japanese Yen (JPY) from the Bank of Japan’s (BoJ) hawkish policy outlook.
Market participants are keenly awaiting the US Federal Reserve’s (Fed) interest rate decision, scheduled for later in the North American session. The focus will soon shift to the BoJ’s policy decision on Friday, with expectations for rates to remain unchanged but with potential for future rate hikes.
Japanese Finance Minister Shunichi Suzuki remarked on Tuesday that rapid fluctuations in foreign exchange rates are undesirable. He stressed that officials will carefully monitor the impact of currency movements on the Japanese economy and citizens’ livelihoods. The government plans to continuously evaluate the effects of a stronger Yen and respond as necessary, according to Reuters.
Conversely, the downside for the AUD/JPY pair may be limited as the Australian Dollar (AUD) gains support from the Reserve Bank of Australia‘s (RBA) assertive stance on monetary policy. RBA Governor Michele Bullock has indicated that it is too early to consider rate cuts given ongoing high inflation. RBA Assistant Governor Sarah Hunter added that although the labor market remains tight, wage growth appears to have peaked and is anticipated to decelerate further.
Investors are also awaiting Australia’s jobs report, including Employment Change and the Unemployment Rate for August, scheduled for release on Thursday. This data is expected to offer insights into the labor market’s health and could influence expectations for future domestic monetary policy adjustments.
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