CFD Trading Rate Australian Dollar vs Japanese Yen (AUDJPY)

• AUD/JPY continues to rise amid Japan's political instability, which casts uncertainty over the Bank of Japan's policy direction.
• Recent polls show that Japan's Liberal Democratic Party-led coalition may lose its majority in Parliament.
• The Australian Dollar gained ground due to the rising hawkish mood surrounding the RBA.

AUD/JPY extends its gains for the third consecutive day, trading near 101.60 during European hours on Wednesday. The Japanese Yen (JPY) is under heavy selling pressure due to growing concerns over political instability, which further clouds the outlook for the Bank of Japan's (BoJ) monetary policy.

In Japan, recent polls indicate the ruling coalition led by the Liberal Democratic Party (LDP) may lose its majority in the general election this weekend, which could jeopardize Prime Minister Shigeru Ishiba's position or push the party to seek an additional coalition partner to remain in power, per Reuters.

In its October World Economic Outlook (WEO) report, the IMF downgraded Japan's economic growth forecast to 0.3% for this year, down from 1.7% in 2023. The projection was revised downward by 0.4% compared to the July outlook. Looking ahead, the IMF expects the economy to grow by 1.1% in 2025, driven by stronger private consumption as real wage growth picks up.

Furthermore, traders will likely observe the speech of the Bank of Japan Governor Kazuo Ueda at the IMF-hosted "Governors Talk" session scheduled later in the North American session.

The Australian Dollar (AUD) receives support as upbeat employment data has strengthened the hawkish sentiment surrounding the Reserve Bank of Australia (RBA). Further support for the Aussie Dollar came from China's recent rate cuts, as China remains Australia's largest trading partner.

On Monday, RBA Deputy Governor Andrew Hauser expressed some surprise at the robust employment growth. He pointed out that the labor participation rate is notably high and clarified that while the RBA relies on data for its decisions, it is not overly fixated on it.

• AUD/JPY extends its gains as traders expect the RBA to maintain current interest rates in 2024.
• The Australian Dollar gains support as China's recent rate cuts may boost demand for Australian exports.
• The subdued Japanese Yen could heighten market concerns, possibly leading to another intervention by Japanese authorities.

AUD/JPY continues to gain ground for the second successive session, hovering around 100.90 during the European trading hours on Tuesday. The Australian Dollar (AUD) receives support from hawkish sentiment surrounding the Reserve Bank of Australia (RBA) regarding its policy outlook, bolstered by positive employment data released last week.

The Employment Change surged by 64.1K in September, bringing the total employment to a record 14.52 million. This far surpassed market expectations of a 25.0K increase, following a revised rise of 42.6K in the previous month.

Additionally, the AUD found support from China's recent rate cuts, given that China remains Australia’s largest trading partner. The People's Bank of China (PBoC) reduced the 1-year Loan Prime Rate (LPR) to 3.10% from 3.35% and the 5-year LPR to 3.60% from 3.85%, in line with expectations. Lower borrowing costs are anticipated to stimulate China's domestic economic activity, potentially increasing demand for Australian exports.

The weakening Japanese Yen (JPY) may fuel market fears, potentially triggering another intervention by Japanese authorities. However, Japan's Deputy Chief Cabinet Secretary, Kazuhiko Aoki, declined to comment on currency movements on Tuesday. Meanwhile, Chief Cabinet Secretary Yoshimasa Hayashi acknowledged both the positive and negative aspects of the Yen’s fluctuations.

Bank of Japan (BoJ) Executive Director Takashi Kato stated that the BoJ is not targeting specific FX levels but is closely monitoring upside risks from rising import costs. Kato also emphasized the need to carefully assess the US economy, upcoming elections, and Federal Reserve policy.

• AUD/JPY remains tepid due to a potential for forex intervention by the Japanese authorities.
• The Japanese Yen faced challenges due to uncertainty surrounding the BoJ policy outlook.
• The Australian Dollar may appreciate as a solid labor report has reduced the odds of RBA’s rate cuts this year.

The AUD/JPY pair continues to edge lower for the second consecutive session, trading near 100.20 during European trading hours on Monday. The Japanese Yen (JPY) may have gained some support from the possibility of currency intervention by Japanese authorities.

However, uncertainty surrounding the timing and pace of future rate hikes by the Bank of Japan (BoJ) remains a key factor weighing on the Yen, which could help limit the downside of the AUD/JPY cross.

On Friday, Japan’s Vice Finance Minister for International Affairs, Atsushi Mimura, remarked that recent Yen movements have been "somewhat rapid and one-sided," emphasizing that excessive volatility in the forex market is undesirable.

The downside risk for the AUD/JPY cross appears limited, as the Australian Dollar (AUD) may be buoyed by the hawkish sentiment surrounding the Reserve Bank of Australia (RBA). Last week's strong employment data from Australia has diminished the chances of the RBA cutting interest rates this year.

Additionally, the Aussie Dollar has been supported by China’s recent rate cuts, as China is Australia's largest trading partner. On Monday, the People's Bank of China (PBoC) lowered the 1-year Loan Prime Rate (LPR) from 3.35% to 3.10% and the 5-year LPR from 3.85% to 3.60%, as expected. These reductions in borrowing costs are likely to boost China's domestic economic activity, which could, in turn, drive demand for Australian exports.

RBA Deputy Governor Andrew Hauser addressed the CBA 2024 Global Markets Conference in Sydney on Monday, expressing slight surprise at the strength of employment growth. Hauser noted that the labor participation rate is remarkably high and emphasized that while the RBA is data-dependent, it is not data-obsessed.

• AUD/JPY weakens to around 100.50 in Friday’s Asian session.
• China's economy expanded in the third quarter at the slowest pace since early last year. 
• The Japanese Yen edges higher amid FX intervention fears. 

The AUD/JPY cross trades on a softer note near 100.50 during the Asian trading hours on Friday. The verbal intervention from Japanese authorities provides some support to the Japanese Yen (JPY) against the Australian Dollar (AUD). 

China's economy expanded at a slower-than-expected rate of 4.6% YoY in the July-September quarter, compared to the previous reading of 4.7%, the National Bureau of Statistics showed Friday. The figure was slightly better than analysts expected. Meanwhile, the country’s Retail Sales increased by 3.2% YoY in September versus the 2.5% expected, and Industrial Production climbed 5.4% YoY in September from 4.5% in August, stronger than the 4.6% expected. 

On Friday, the Chinese authorities stated that they will urge financial institutions to act swiftly in implementing expansive financial policies, and the officials will implement incremental policies following a meeting on October 16. Any further plans from China to boost economic growth could boost the Aussie as China is a major trading partner to Australia. 

The verbal intervention from Japanese officials lifts the JPY for the time being. Atsushi Mimura, Japan’s Vice Finance Minister for International Affairs and top foreign exchange official, said on Friday that he will closely monitor the foreign exchange move with a high sense of urgency.

The Bank of Japan (BoJ) is widely expected to keep interest rates unchanged at its October meeting, according to a Reuters poll. A slim majority of economists see the Japanese central bank holding the current rate through the end of December, and nearly 90% of economists expect a hike to 0.5% by the end of March.

• AUD/JPY edges higher due to a solid labor report from Australia released on Thursday.
• Australia’s Employment Change rose by 64.1K, far exceeding the expected 25.0K increase.
• The Japanese Yen lost ground as the domestic Trade Balance reported a larger-than-expected deficit of JPY 294.3 billion in September.

AUD/JPY gains momentum after two consecutive days of losses, trading near the key psychological level of 100.00 during the European session on Thursday. This upward movement is largely driven by the strengthening of the Australian Dollar (AUD), following a robust Australian employment report.

In September, seasonally adjusted Employment Change surged by 64.1K, bringing total employment to a record 14.52 million, far exceeding market expectations of a 25.0K increase. This followed a revised rise of 42.6K in August.

Additionally, Australia's Unemployment Rate held steady at 4.1% in September, matching the revised figure for August and beating forecasts of 4.2%. The number of unemployed individuals fell by 9.2K, bringing the total to 615,700.

On the JPY’s side, the Japanese Yen (JPY) faces additional downward pressure after the release of weaker-than-expected Trade Balance data on Thursday. Japan's Trade Balance reported a deficit of JPY 294.3 billion in September, compared to August's larger deficit of JPY 703.2 billion. This marked the third consecutive month of a trade gap, and it was worse than market expectations of a JPY 237.6 billion shortfall.

Japan's exports declined by 1.7% year-over-year in September, reversing the marginally revised 5.5% growth in August and missing forecasts of a 0.5% increase. This was the first drop in exports since November 2023. Meanwhile, imports rose by 2.1% year-over-year, following a 2.3% increase in August but also falling short of the 3.2% growth expected by the market. Although this was the sixth straight month of rising imports, it represented the softest growth in the sequence.

This disappointing trade balance report adds further complications to the Bank of Japan's (BoJ) plans to exit its ultra-easy monetary policy, putting additional downward pressure on the Japanese Yen (JPY). Earlier in the week, BoJ board member Seiji Adachi cautioned that the BoJ must avoid making any drastic changes to its policy, citing uncertainties in the global economic outlook and concerns over domestic wage growth.

• AUD/JPY remains neutral but holds above 100.00, supported by risk-on sentiment and weakness in the Yen against the US Dollar.
• If the pair clears 101.40, it could target further upside toward 102.00 and 102.50, with potential resistance at 103.00.
• A drop below 100.00 would bring support at the top of the Ichimoku Cloud around 99.70/80, with additional support at 98.77.

The AUD/JPY consolidates at around 100.30 yet posts minuscule gains of over 0.06% at the time of writing. A risk-on impulse keeps the Australian Dollar from posting losses against the Japanese Yen, which loses some ground against the US Dollar.

AUD/JPY Price Forecast: Technical outlook

The AUD/JPY is neutral biased, though it has broken the 100.00 barrier. This opened the door for the cross-pair to trade within the 100.00-101.40 range, with further upside eyed.

Now that buyers have lifted the exchange rate above the Ichimoku Cloud (Kumo), the pair could test the year-to-date (YTD) peak at 109.37.

The momentum remains bullish and slightly consolidated, as shown by the Relative Strength Index (RSI).

If AUD/JPY surpassed the October 7 high at 101.40, it opened the door to challenge 102.00. On further strength, the AUD/JPY's next resistance would be 102.50, ahead of challenging the 103.00 mark

Conversely, if the cross-pair drops below 100.00, the first support would be the top of the Kumo at 99.70/80. Once cleared, the next support would be Senkou Span A at 98.77.

AUD/JPY Price Action – Daily Chart

• AUD/JPY weakens to near 100.00 in Friday’s early Asian session, down 0.50% on the day.
• The cross keeps the bullish vibe above the key 100-period EMA, but RSI indicator shows neutral momentum. 
• The immediate resistance level is located at 100.73; the first downside target emerges at the 99.00 psychological level.

The AUD/JPY cross extends its decline to around 100.00 during the early European session on Friday. The Japanese Yen (JPY) climbs against the Australian Dollar (AUD) after comments from Japan’s ministers earlier in the day.

Japan's new economy minister Ryosei Akazawa said on Friday that the timing of changes in the Bank of Japan’s (BoJ) monetary policy should be aligned with the broader goal of exiting deflation. Additionally, Japan's Chief Cabinet Secretary Yoshimasa Hayashi announced on Friday that new Prime Minister Shigeru Ishiba has instructed the compilation of a comprehensive economic package. Hayashi added that he will submit a supplementary budget to Parliament after the lower house election. 

According to the 4-hour chart, the positive outlook of the AUD/JPY cross prevails as the cross holds above the key 100-period Exponential Moving Averages (EMA). However, the further consolidation cannot be ruled out as the Relative Strength Index (RSI) hovers around the midline, suggesting the neutral momentum of the cross. 

The immediate resistance level emerges near the high of October at 100.73. Further north, the next upside barrier is seen at 101.35, the upper boundary of the Bollinger Band. The additional upside filter to watch is the 102.00 psychological mark. 

On the downside, the 99.00 psychological level acts as an initial support level for the cross. Any follow-through selling below this level will see a drop to the 98.45-98.65 region, representing the 100-period EMA and the lower limit of the Bollinger Band. Extended losses will see the next downside target at 97.63, the low of September 23.

AUD/JPY 4-hour chart

• AUD/JPY depreciates due to risk-off mood amid rising geopolitical tensions.
• Israel's security cabinet decided to take decisive action in response to the recent Iranian attack.
• The Japanese Yen struggles as PM Ishiba expressed that the current environment doesn’t require further interest rate increases.

AUD/JPY trims its intraday gains, holding some gains around 100.50 during the European hours on Thursday. The risk-sensitive Australian Dollar (AUD) depreciates as the rising geopolitical tensions have dampened the risk appetite and undermined the AUD/JPY cross.

The Israeli Broadcasting Authority (IBA) reported that Israel's security cabinet has resolved to take decisive action in response to the recent Iranian attack. On Tuesday night, Iran launched more than 200 ballistic missiles and drone strikes targeting Israel.

However, the downside risk for the AUD may be limited due to the hawkish outlook surrounding the Reserve Bank of Australia (RBA). Data released earlier this week showed stronger-than-expected retail sales growth for August, lowering the likelihood of an early rate cut by the RBA.

On Thursday, Australia’s Trade Balance for August stood at 5,644 million month-over-month, surpassing market expectations of 5,500 million and slightly higher than July’s surplus of 5,636 million. However, both Exports and Imports declined by 0.2% month-over-month in August. Markets have almost fully discounted the possibility of a rate cut in November.

The AUD/JPY cross received support as the Japanese Yen (JPY) faced challenges following blunt comments on monetary policy from the new Prime Minister (PM) Shigeru Ishiba, who met with Bank of Japan (BoJ) Governor Kazuo Ueda on Wednesday.

Japan’s Prime Minister Ishiba stated, "I do not believe that we are in an environment that would require us to raise interest rates further," according to Reuters. In the previous session, the Japanese Yen fell nearly 2% against the US Dollar (USD), marking its largest drop since February of last year.

• AUD/JPY receives support from the hawkish sentiment surrounding the RBA’s interest rate trajectory.
• The Australian Dollar may receive downward pressure from the rising geopolitical tensions in the Middle East.
• Japan's Economy Minister Akazawa stated that PM Ishiba expects BoJ to conduct thorough economic assessments before further rate hikes.

AUD/JPY retraces its recent losses registered in the previous day, trading around 99.40 during Wednesday’s European session. The hawkish sentiment surrounding the Reserve Bank of Australia (RBA) regarding its interest rate trajectory provides support for the Australian Dollar (AUD) and underpins the AUD/JPY cross.

However, the upside of the risk-sensitive Aussie Dollar could be retrained due to rising risk aversion sentiment amid escalating geopolitical tensions in the Middle East. Iran launched over 200 ballistic missiles at Israel, prompting Prime Minister Benjamin Netanyahu to vow retaliation against Tehran for the Tuesday attack. In response, Iran warned that any counterstrike would lead to "vast destruction," heightening concerns of a broader conflict, per Bloomberg.

The Japanese Yen (JPY) received downward pressure as the BoJ’s Summary of Opinions from September’s Monetary Policy Meeting indicates no immediate plans for additional rate hikes. The central bank intends to maintain its accommodative stance but remains open to adjustments if economic conditions show significant improvement.

Additionally, Japan's Economic Revitalization Minister Ryosei Akazawa stated on Wednesday that Prime Minister Shigeru Ishiba anticipates the Bank of Japan will conduct thorough economic evaluations before raising interest rates again.

In his first news conference as the economy minister, Akazawa emphasized, "Our top priority is to ensure that Japan fully exits deflation," adding that "it will take some time to achieve a complete exit," according to Reuters.

• AUD/JPY draws support from a combination of factors and moves back closer to a two-month top.
• Ishiba's comments about BoJ rate hikes overshadow upbeat domestic data and undermine the JPY.
• The stronger Australian Retail Sales data boosts the Aussie amid optimism over Chinese stimulus.

The AUD/JPY cross attracts buyers for the second straight day on Tuesday and climbs to the 99.75-99.80 region during the Asian session, closer to a technically significant 200-day Simple Moving Average (SMA). 

The Japanese Yen (JPY) continues to be undermined by comments from Japan's incoming Prime Minister (PM) Shigeru Ishiba, saying that the Bank of Japan's (BoJ) monetary policy must remain accommodative to underpin a fragile economic recovery. Furthermore, Ishiba said on Monday that he intends to call a general election on October 27, which overshadows mostly upbeat Japanese macro data and does little to provide any meaningful impetus to the JPY. 

A government report published earlier today showed that Japan's Unemployment rate dropped to 2.5% in August from the 2.7% previous. Separately, a BoJ's Tankan survey indicated that sentiment among Japan's big manufacturers was steady and slight improvement in large non-manufacturers' mood during the third quarter. Meanwhile, BoJ's Summary of Opinions revealed that the central bank will adjust its accommodative stance if economic conditions improve.

The Australian Dollar (AUD), on the other hand, strengthened a bit following the release of domestic Retail Sales, which rose 0.7% in August as compared to a modest 0.1% increase in the previous month. This comes on top of the Reserve Bank of Australia's (RBA) hawkish stance and the optimism over a slew of stimulus measures from China last week, which continues to benefit the Aussie and turns out to be a key factor acting as a tailwind for the AUD/JPY cross.

It, however, remains to be seen if bulls can build on the momentum or once again face rejection near the 100.00 psychological mark amid the growing market conviction that the BoJ will hike interest rates again by the end of this year. Furthermore, the formation of a 'Death Cross' on the daily chart –  the 50-day Simple Moving Average (SMA) crossing below the 200-day SMA – warrants caution before placing bullish bets around the AUD/JPY cross and positioning for further gains.

• AUD/JPY receives support from the hawkish sentiment surrounding the RBA’s policy outlook.
• The risk-sensitive AUD appreciates due to improved market sentiment amid dovish sentiment surrounding the Fed's interest rates trajectory.
• The Japanese Yen struggles as upcoming PM Shigeru Ishiba says that the monetary policy should continue to be accommodative.

AUD/JPY gains ground, trading around 98.70 during the European session on Monday. This upside of the AUD/JPY cross is attributed to the Reserve Bank of Australia’s (RBA) hawkish stance contributing support to the Australian Dollar (AUD). The RBA kept its cash rate at 4.35% for a seventh consecutive meeting and stated that the policy would need to stay restrictive to ensure inflation slowed.

The AUD remains stronger despite the mixed Manufacturing Purchasing Managers’ Index (PMI) data from China, Australia’s largest trading partner. China's Caixin Manufacturing PMI fell to 49.3 in September, indicating contraction, down from 50.4 in August. Meanwhile, China’s NBS Manufacturing PMI improved to 49.8, up from 49.1 in the previous month and surpassing the market consensus of 49.5.

Additionally, the rising expectations that the US Federal Reserve (Fed) may continue its policy easing in November is improving the market sentiment and contributing support for the risk-sensitive Australian Dollar. The CME FedWatch Tool indicates that markets are assigning a 55.9% probability to a 25 basis point rate cut by the Federal Reserve in November.

The Japanese Yen (JPY) receives downward pressure due to the dovish comments from Japan's upcoming Prime Minister, former Defense Chief Shigeru Ishiba. Ishiba stated on Sunday that the country's monetary policy should continue to be accommodative, indicating the necessity of maintaining low borrowing costs to support a fragile economic recovery, according to The Japan Times.

On Monday, Japan's Retail Trade increased by 2.8% year-on-year in August, surpassing market expectations of 2.3% and slightly exceeding the upwardly revised 2.7% rise from the previous month. On a month-over-month basis, seasonally adjusted Retail Trade rose by 0.8%, marking the largest increase in three months, following a 0.2% gain in July.

Japan's Chief Cabinet Secretary, Yoshimasa Hayashi, refrained from commenting on Monday's daily stock market fluctuations. Hayashi emphasized the importance of closely monitoring the economic and financial situation both domestically and internationally with a sense of urgency. He also noted the need for ongoing collaboration with the Bank of Japan.

• AUD/JPY loses ground as Shigeru Ishiba has won the leadership race to become Japan’s prime minister.
• The Tokyo Consumer Price Index rose 2.2% YoY in September, down from a 2.6% increase in August.
• Australian Treasurer Jim Chalmers views China's new stimulus measures as a "really welcome development."

AUD/JPY breaks its winning streak that began on September 16, trading around 98.60 during the early European session on Friday. The Japanese Yen (JPY) gains ground as former Defense Chief Shigeru Ishiba won the Liberal Democratic Party's (LDP) presidential election to become Japan's prime minister. However, the JPY received downward pressure due to the rising concerns over the Bank of Japan’s (BoJ) interest rates outlook.

On Friday, The Tokyo Consumer Price Index (CPI) increased 2.2% year-over-year in September, down from a 2.6% rise in August. Meanwhile, the CPI excluding fresh food and energy climbed 1.6% YoY in September, unchanged from the previous reading. The CPI excluding fresh food increased 2.0% as expected, compared to the previous rise of 2.4%.

The AUD/JPY cross may receive upward support following the news of further stimulus from China, its largest trading partner, along with the dovish Federal Reserve’s (Fed) policy outlook, which lifted market sentiment for riskier currencies like the Australian Dollar (AUD).

Australian Treasurer Jim Chalmers is currently in China to strengthen economic ties between the two nations. During his visit, Chalmers held candid and productive discussions with the National Development and Reform Commission (NDRC). He highlighted China's economic slowdown as a key factor in weaker global growth while welcoming the country's new stimulus measures as a "really welcome development."

• AUD/JPY remains firms on multiple tailwinds.
• The RBA left its key interest rates steady at 4.35% on Tuesday.
• Investors await Japan’s Tokyo CPI data for fresh BoJ’s interest rate outlook.

The AUD/JPY pair rises further to near 99.60 in Thursday’s European session. The cross extends its winning spell for the ninth trading day on Thursday as the Australian Dollar (AUD) performs strongly on multiple tailwinds such as: Reserve Bank of Australia’s (RBA) hawkish interest rate outlook and China’s larger-than-expected monetary stimulus.

After leaving the Official Cash Rate (OCR) unchanged at 4.35% on Tuesday, the comments from the RBA indicated that it is unlikely to start reducing interest rates this year due to sticky price pressures and upbeat labor market health.

In addition to the RBA’s hawkish guidance, the announcement of a slew of stimulus packages by China has also strengthened the AUD’s outlook. It is worth noting that the Australia is the leading trading partner of China and an attempt to revive the Chinese economy will have a positive impact on the Australian Dollar.

Meanwhile, the Japanese Yen (JPY) will be guided by the Tokyo Consumer Price Index (CPI) data for August, which will be published on Friday. The Tokyo CPI excluding Fresh Food is estimated to have grown by 2%, slower than 2.4% in July. This would dampen market expectations for the Bank of Japan (BoJ) to hike interest rates further.

AUD/JPY gathers strength to break above the horizontal resistance plotted from September 2 high of 99.87 on a daily timeframe. Given a nine-day winning spree, the risk-barometer would thrash the immediate resistance. Upward-sloping 20-day Exponential Moving Average (EMA) near 97.40 suggests that the near-term trend is bullish.

The 14-day Relative Strength Index (RSI) has climbed above 60.00. A bullish momentum would trigger if the oscillator sustains above the same.

Going forward, a decisive break above September 2 high of 99.87 will result in further upside in the asset towards the psychological resistance of 100.00 and July 30 high of 101.78.

On the flip side, a downside move below September 25 low of 98.50 would drag the asset towards the 20-day EMA, which is currently trading around 97.40, followed by September 12 high near 95.70.

AUD/JPY daily chart

• AUD/JPY steadily moves back closer to a multi-week high touched on Wednesday.
• The RBA’s hawkish stance and a positive risk tone continue to benefit the Aussie.
• Bets for another BoJ rate hike in 2024 should limit the JPY losses and cap the cross.

The AUD/JPY cross attracts some dip-buying during the Asian session on Thursday and jumps back above the 99.00 mark in the last hour, though remains below over a three-week top touched the previous day. 

The Australian Dollar (AUD) continues to draw support from a more hawkish stance adopted by the Reserve Bank of Australia (RBA). In fact, the Australian central bank reiterated on Tuesday that policy will need to be restrictive until confidence returns that inflation is moving sustainably towards the target range. Adding to this, RBA Governor Michele Bullock stated that the recent data has not significantly influenced the policy outlook. 

Moreover, the latest consumer inflation figures released on Wednesday showed that the core CPI remains above the RBA's 2-3% target band and is not enough to justify rate cuts in the near term. Meanwhile, the RBA's semi-annual Financial Stability Review (FSR) revealed that the risk of widespread financial stress remains limited. Furthermore, a positive risk tone undermines the safe-haven Japanese Yen (JPY) and benefits the risk-sensitive Aussie. 

That said, growing acceptance that the Bank of Japan (BoJ) will hike interest rates again by the end of this year should help limit deeper JPY losses and keep a lid on the AUD/JPY cross. The bets were reaffirmed by the BoJ meeting minutes released earlier today, which showed that board members shared a view over the need for vigilance to the risk of inflation overshoot and that it was appropriate to adjust the degree of monetary support moderately.

Even from a technical perspective, the formation of a 'Death Cross' on the daily chart – with the 50-day Simple Moving Average (SMA) crossing below the very important 200-day SMA – warrants some caution for bullish traders. Hence, any subsequent move up is more likely to confront stiff resistance and remain capped near the 100.00 psychological mark, or the 200-day SMA, which should now act as a key pivotal point for the AUD/JPY cross.

• AUD/JPY attracts some follow-through buyers and reacts little to Australian inflation figures.
• The headline CPI eased to 2.7% YoY in August, while the core CPI remains above the RBA’s target.
• Bets for another BoJ rate hike in 2024 to limit the JPY losses and keep a lid on the currency pair.

The AUD/JPY cross trades with a positive bias during the Asian session on Wednesday and is currently placed just below the 99.00 mark, or over a three-week top touched the previous day. The mixed fundamental backdrop, meanwhile, warrants some caution for bullish traders and before positioning for an extension of the recent upward trajectory witnessed over the past two weeks or so. 

Against the backdrop of bets for a more aggressive policy easing by the Federal Reserve (Fed), China's new stimulus measures to support the faltering economy boost investors' appetite for riskier assets. This is evident from the prevalent upbeat mood across the global equity markets, which is seen undermining the safe-haven Japanese Yen (JPY) and benefiting the risk-sensitive Aussie. Apart from this, the Reserve Bank of Australia's (RBA) hawkish stance acts as a tailwind for the AUD/JPY cross. 

The Australian central bank reiterated on Tuesday that policy will need to be restrictive until confidence returns that inflation is moving sustainably towards the target range. Adding to this, RBA Governor Michele Bullock stated that the recent data has not significantly influenced the policy outlook. That said, official data released earlier today showed that Australian Consumer Price Inflation (CPI) dropped in August, to its lowest level since early 2022 due to state government rebates. 

In fact, the Australian Bureau of Statistics reported that the headline CPI rose at an annual pace of 2.7% in August, down sharply from 3.5% in July. Meanwhile, core CPI decelerated to the 3.4% YoY rate from 3.8%, though remains above the RBA's 2-3% target band and is not enough to justify rate cuts in the near term. However, expectations that the Bank of Japan (BoJ) will hike interest rates again by the end of this year limit the JPY losses and should cap any further gains for the AUD/JPY cross. 

Investors now look forward to the release of BoJ meeting minutes on Thursday, which, along with the broader risk sentiment, will drive the JPY demand and provide a fresh impetus to the AUD/JPY cross. From a technical perspective, a sustained move above the 50-day Simple Moving Average (SMA) could be seen as a fresh trigger for bullish traders. That said, any subsequent move up is likely to remain capped near the 100.00 psychological mark, representing the 200-day SMA.

• AUD/JPY attracts some follow-through buying on Tuesday and reacts little to the RBA decision.
• The RBA decided to leave its benchmark interest rates unchanged and stick to its hawkish stance.
• Bets for another BoJ rate hike in 2024 limit the JPY losses and might cap the upside for the cross.

The AUD/JPY cross trades with a mild positive bias during the Asian session on Tuesday and climbs to a three-week top, around the 98.75-98.80 region after the Reserve Bank of Australia (RBA) announced its policy decision. Spot prices now look to build on the recent move up beyond the 50-day Simple Moving Average (SMA). 

As was widely expected, the Australian central bank decided to stand pat for the seventh straight meeting and hold the Official Cash Rate (OCR) steady at 4.35% at its September policy meeting. In the accompanying policy statement, the RBA stuck to its hawkish stance and reiterated that policy will need to be sufficiently restrictive until confidence returns that inflation is moving sustainably towards the target range. This, along with a surprise move by the People's Bank of China (PBOC) on Monday, to lower its 14-day repo rate by 10 basis points to stimulate the economic recovery, continues to underpin the Australian Dollar (AUD) and lend support to the AUD/JPY cross. 

Meanwhile, the underlying bullish sentiment across the global financial markets is seen undermining the safe-haven Japanese Yen (JPY) and turning out to be another factor acting as a tailwind for spot prices. That said, growing acceptance that the Bank of Japan (BoJ) will raise interest rates again by the end of this year, bolstered by last week's data showing that Japan's core inflation rose for the fourth consecutive month, should help limit the JPY losses. Apart from this, persistent geopolitical risk might further contribute to capping gains for the AUD/JPY cross.

• AUD/JPY weakens around 97.05 in Friday’s Asian session, down 0.22% on the day. 
• The BoJ kept the interest rate unchanged in September, as widely expected. 
• CBA analysts expect the RBA to cut its Official Cash Rate (OCR) in December.

The AUD/JPY cross loses ground around 97.05, snapping the four-day winning streak during the Asian trading hours on Friday. The cross drifts lower after the Bank of Japan (BoJ) announced its policy decision. 

As widely anticipated, the BoJ decided to keep the short-term rate target in the range of 0.15%-0.25% after the conclusion of its two-day monetary policy review meeting on Friday. The Japanese BoJ remains cautious about hiking further as it could harm economic activity and hinder the demand-driven inflation that it tries to support. 

However, Japanese officials will meet again in October and December, leaving the door open for more rate hikes after recent economic data revealed that inflation in Japan has come hotter than estimated. The rising speculation that the Japanese central bank will raise the interest rate again by the end of this year provides some support to the Japanese Yen (JPY) and acts as a headwind for AUD/JPY.
 
Data released by the Japan Statistics Bureau showed on Friday that the National Consumer Price Index (CPI) rose 3.0% YoY in August, compared to 2.8% in July. Meanwhile, the core CPI, which excludes volatile fresh food costs, climbed 2.8% YoY in August versus 2.7% prior, matching the market expectation of 2.8%. 

On the Aussie front, Commonwealth Bank of Australia (CBA) analysts moved their expected timing of the first RBA rate cut from November 2024 to December 2024, with a 25 basis points (bps) rate cut expected. This, in turn, might weigh the Australian Dollar (AUD) against the JPY in the near term. 

• AUD/JPY gains ground following the release of employment data on Thursday.
• Fed Chair Powell’s remarks tempered optimism, preventing stronger risk-sensitive currencies like AUD.
• The upside of the currency cross could be limited as the JPY receives support from the hawkish BoJ.

AUD/JPY continues its winning for the fourth successive day, trading around 97.10 during the early European hours. The Australian Dollar (AUD) received support following the labor market report released on Thursday.

Australian Employment Change rose to 47.5K in August, down from 58.2K in July but significantly above the consensus forecast of 25.0K. The Unemployment Rate held steady at 4.2% in August, consistent with both expectations and the previous month’s figure, according to data released by the Australian Bureau of Statistics (ABS).

The US Federal Reserve’s (Fed) 50 basis point interest rate cut on Wednesday may have improved market confidence and supported risk-sensitive currencies like the Australian Dollar. However, comments from Fed Chair Jerome Powell tempered optimism, preventing a stronger risk-on sentiment in the markets.

Fed’s Chair Powell stated in the post-meeting press conference, that the Fed is not in a hurry to ease policy and emphasized that half-percentage point rate cuts are not the "new pace." Additionally, Fed policymakers raised their long-term projection for the federal funds rate from 2.8% to 2.9%.

The upside of the AUD/JPY cross could be limited as the Japanese Yen (JPY) receives support from the hawkish sentiment surrounding the Bank of Japan (BoJ). Traders are anticipating the BoJ's policy decision, with expectations that rates will remain unchanged while leaving room for potential future rate hikes.

Additionally, Japan’s National Consumer Price Index (CPI) data will be closely monitored, as the inflation report could offer new insights into the Bank of Japan’s (BoJ) future interest rate trajectory.

• AUD/JPY recovers its daily losses, possibly driven by a risk-on mood amid the expected Federal Reserve interest rate cut.
• The Japanese Yen receives support from the hawkish sentiment surrounding the BoJ’s policy outlook.
• The Australian Dollar may appreciate due to the Reserve Bank of Australia’s aggressive monetary policy approach.

AUD/JPY trims its intraday losses, trading around 96.10 during the European hours on Wednesday. However, the AUD/JPY cross may hold losses as the Japanese Yen (JPY) receives support from the hawkish sentiment surrounding the Bank of Japan’s (BoJ) policy outlook.

Traders await the US Federal Reserve’s (Fed) interest rate decision scheduled to be released later in the North American session. The focus will shift toward the BoJ policy decision on Friday, with expectations of keeping rates unchanged while leaving the possibility open for further rate hikes.

Japanese Finance Minister Shunichi Suzuki stated on Tuesday that rapid foreign exchange (FX) fluctuations are undesirable. Suzuki emphasized that officials will closely monitor how FX movements affect the Japanese economy and people's livelihoods. The government will continue to assess the impact of a stronger Japanese Yen and respond accordingly, according to Reuters.

The downside of the AUD/JPY cross could be restrained as the Australian Dollar (AUD) receives support from the Reserve Bank of Australia's (RBA) hawkish stance on monetary policy outlook. RBA Governor Michele Bullock stated that it is premature to consider rate cuts due to persistently high inflation. Additionally, RBA Assistant Governor Sarah Hunter noted that while the labor market remains tight, wage growth appears to have peaked and is expected to slow further.

Investors are now awaiting Australia's jobs data, including Employment Change and the Unemployment Rate for August, set to be released on Thursday. This report may provide insights into the health of the labor market and may influence expectations regarding the future direction of domestic monetary policy.