The AUD/JPY pair remained steady near 95.10 during Asian trading hours on Wednesday following the Bank of Japan’s (BoJ) widely anticipated interest rate decision. The central bank opted to keep its short-term interest rate target within the 0.40%-0.50% range after concluding its two-day policy review.
BoJ Signals Readiness for Further Rate Hikes
In its Monetary Policy Statement, the BoJ acknowledged that Japan’s economy is recovering at a moderate pace, though some weak spots persist. Consumption is gradually improving, and inflation expectations continue to rise, albeit cautiously. However, risks stemming from global trade policies and external economic conditions remain a concern.
BoJ Governor Kazuo Ueda reinforced the bank’s commitment to potential future rate hikes if inflation moves sustainably toward the 2% target. In a speech to parliament on March 12, Ueda noted that long-term interest rates are shaped by market expectations of the BoJ’s policy direction, hinting that further tightening remains a possibility later in the year.
Australian Dollar Steady Ahead of Fed Decision
The Australian Dollar (AUD) held its ground as investors awaited the US Federal Reserve’s (Fed) interest rate decision later in the day. With inflation concerns lingering and economic uncertainty persisting, markets widely expect the Fed to maintain its current rate stance.
On the domestic front, Australia’s economic indicators showed resilience. The Westpac-Melbourne Institute Leading Index rose 0.1% month-over-month in February, matching the previous month’s growth. Additionally, the six-month annualized growth rate in the index, which provides insights into future economic conditions, increased to 0.8% from 0.6%, signaling continued economic stability despite pressures from currency and commodity markets.
Outlook: AUD/JPY Poised for Further Gains?
The AUD/JPY pair’s stability suggests that traders are weighing the impact of the BoJ’s cautious stance against expectations for global central bank policies. A sustained move above 95.10 could reinforce bullish momentum, with the next key resistance level at 95.50. On the downside, initial support is seen around 94.60, with further weakness possibly extending toward 94.20.
As global monetary policies remain in focus, market sentiment will likely dictate the next directional move for AUD/JPY in the coming sessions.
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