The AUD/JPY cross gained momentum during the Asian trading hours on Tuesday, approaching the 100.40 level as the Australian Dollar (AUD) strengthened following the Reserve Bank of Australia‘s (RBA) interest rate decision.
The RBA opted to keep the Official Cash Rate (OCR) unchanged at 4.35% after its November policy meeting, a move that aligned with market expectations. The Australian Dollar maintained its firmness post-announcement, reflecting confidence in the central bank‘s stance.
In its Monetary Policy Statement, the RBA indicated that board members will closely monitor upcoming data and reassess risks as they arise. The central bank emphasized the need for a sufficiently restrictive monetary policy until there is clear evidence that inflation is moving sustainably toward its target range.
Traders are now looking to the RBA’s updated economic forecasts and Governor Michele Bullock’s press conference for further insights into the interest rate outlook, which may influence market sentiment.
Conversely, uncertainty surrounding the US presidential election could enhance demand for safe-haven currencies like the Japanese Yen (JPY), potentially limiting upside for the AUD/JPY cross. Additionally, less dovish comments from BoJ Governor Kazuo Ueda may support the Yen in the near term. “Many market players had bet that the next rate hike will come in the January-March quarter next year, but he sounded as if he left open the chance of a December hike,” noted Hiroshi Watanabe, a senior economist at Sony Financial Group.
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