The Australian Dollar (AUD) recouped recent losses against the Japanese Yen (JPY) on Friday, trading around 93.30 during Asian market hours. The AUD found support from rising commodity prices, including Gold, Steel, and Iron Ore, strengthening its position against the JPY.
However, trade tensions dampened sentiment after U.S. President Donald Trump upheld a 25% tariff on Australian aluminum and steel exports worth nearly $1 billion. This decision raises concerns over Australia’s trade outlook and key export sectors. Despite the pressure, Australian Prime Minister Anthony Albanese ruled out retaliatory tariffs, emphasizing that such measures would increase consumer costs and fuel inflation.
Meanwhile, the JPY remained under pressure as the Bank of Japan (BoJ) maintained a cautious stance. The central bank is expected to keep interest rates unchanged next week while evaluating the risks posed by escalating U.S. trade tensions on Japan’s export-driven economy. The timing of the BoJ’s next rate hike remains uncertain, with policymakers closely monitoring global uncertainties.
“Japan’s economy and price developments appear stable, but external risks are growing,” a source familiar with BoJ discussions told Reuters. Additional sources echoed concerns that heightened global uncertainty could impact the BoJ’s rate hike trajectory.
Despite recent fluctuations, the JPY remains near multi-month highs against major currencies, bolstered by expectations of further BoJ tightening this year. Additionally, Japanese firms have agreed to significant wage increases for the third consecutive year to help workers manage inflation and address labor shortages. Higher wages are expected to stimulate consumer spending, drive inflation, and provide the BoJ with greater flexibility for future rate hikes.
Related Topics:
