The AUD/JPY cross retraced its recent gains during Thursday’s Asian session, trading around 100.50. This decline follows a strengthening of the Japanese Yen (JPY) after the Bank of Japan (BoJ) maintained its short-term interest rate target at 0.25% during its monetary policy review, a decision that met market expectations for stability.
In its Q3 Outlook Report, the BoJ indicated its intention to continue raising policy rates if economic conditions and inflation align with forecasts, particularly given the current low real interest rates. The central bank aims to implement monetary policy focused on sustainably achieving its 2% inflation target.
However, expectations surrounding Japan’s political landscape could necessitate expansionary fiscal policies, complicating the BoJ’s capacity to further increase interest rates. Concerns about potential government intervention, combined with cautious market sentiment, have supported the safe-haven Japanese Yen. Investors are now looking forward to the post-meeting press conference, where comments from BoJ Governor Kazuo Ueda are expected to provide further insights.
On the Australian front, seasonally adjusted Retail Sales rose by 0.1% month-over-month in September, falling short of the anticipated 0.3% and significantly lower than the previous month’s 0.7% growth. On a quarterly basis, Retail Sales increased by 0.5% in Q3, recovering from a 0.3% decline in the prior quarter.
Additionally, China’s NBS Non-Manufacturing PMI rose to 50.2 in October, up from 50.0 the previous month, although it fell short of expectations of 50.4. The NBS Manufacturing PMI also saw an increase to 50.1, exceeding the prior reading of 49.8 and slightly surpassing the forecast of 50.0. Given the close trade relationship between China and Australia, any developments in the Chinese economy could have significant implications for the Australian market.
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