The AUD/JPY pair extended its gains to near 102.05 during Thursday’s Asian session, buoyed by a risk-on sentiment and ongoing uncertainty surrounding the Bank of Japan‘s (BoJ) potential rate hike. The Japanese Yen (JPY) continues to face downward pressure as the market reacts to the victory of Republican Donald Trump in the US presidential election, which has added further weight on the currency.
Minutes from the BoJ’s latest meeting, released on Wednesday, revealed that the central bank is unlikely to raise interest rates amid ongoing financial and capital market instability. One BoJ policy board member emphasized that the bank should maintain accommodative financial conditions to support economic activity. This stance on rate hikes has contributed to the yen’s weakness, with the uncertainty over any immediate changes likely to keep pressure on the JPY in the short term.
BoJ Intervention Limits Downside Risks for JPY
Despite the negative sentiment around the JPY, the downside appears capped following verbal intervention from Japanese authorities. Japan’s top currency diplomat, Atsushi Mimura, stated on Thursday that authorities were prepared to take action against “excessive” movements in the currency market, offering some support to the yen.
Chinese Data Boosts AUD
On the flip side, the Australian Dollar (AUD) has found support from stronger-than-expected economic data from China. The country’s trade surplus surged to $95.27 billion in October, surpassing expectations of $75.1 billion and the prior month’s $81.71 billion. Exports grew by 12.7% year-on-year, significantly outperforming the expected 5.0% increase and marking a sharp acceleration from September’s 2.4% rise. This robust data has helped bolster the AUD, which is often seen as a proxy for Chinese economic performance.
As a result, the AUD/JPY cross continues to climb, supported by the favorable Chinese data and ongoing BoJ policy uncertainty, with traders monitoring further developments for additional direction in the pair.
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