AUD/JPY climbs above 90.30 as RBA considered rate hike option before pausing spell

• AUD/JPY has surpassed the critical resistance of 90.30 post the release of RBA minutes.
• RBA paused the policy-tightening spell to allow time to gather more information.
• The BoJ has anticipated inflation in a range of 1.6-1.9% for CY2025.

The AUD/JPY pair has scaled above the critical resistance of 90.30 strongly after the release of the Reserve Bank of Australia (RBA) minutes. The RBA minutes convey that policymakers had considered the decision of hiking rates further actively. However, the decision to maintain THE status-quo was taken later to allow time to gather more information.

Citing Australia’s banking system as resilient, RBA policymakers thought that the Board’s future cash rate decisions would depend on developments in the global economy, trends in household spending, and the outlook for inflation and the labor market.

Going forward, investors will keep an eye on China’s Gross Domestic Product (GDP) data. According to the estimates, the Chinese economy has expanded by 2.2% vs. a stagnant performance shown in the last quarter of CY2022. On an annual basis, the economy is expanded by 4.0% against the 2.9% growth rate recorded earlier. It is worth noting that Australia is the leading trading partner of China and higher Chinese GDP data would support the Australian Dollar.

Later this week, the announcement of the interest rate decision by the People’s Bank of China (PBoC) will be of key importance. Last week, the PBoC promised of providing further monetary support to step up retail demand. Chinese inflation is continuously declining for the past few months despite the reopening of the economy after lockdown curbs.

On the Japanese Yen front, the Bank of Japan is considering a projection for consumer prices for the 2025 fiscal year to rise 1.6-1.9% in a move seen to keep market players from betting on the central bank to head to exit from stimulus, quoted by Jiji news, reported by Reuters. This has also postponed the chances of an exit from expansionary monetary policy as the concept cannot be entertained till Japanese inflation sustain confidently above 2%.