AUD/JPY trades near 93.00, downside risks appear amid tariff concerns

• AUD/JPY weakens amid growing concerns about a global tariff war.
• RBA’s February Meeting Minutes highlighted downside risks to the economy.
• Japan’s Unemployment Rate unexpectedly rose to 2.5% in January, from 2.4% prior.

AUD/JPY continues its decline, hovering around 92.80 during early European trading on Tuesday. The Australian Dollar (AUD) remains under pressure after the White House confirmed that US President Donald Trump signed an order raising tariffs on Chinese imports to 20%. Given China’s crucial role as Australia’s largest trading partner, any economic shifts in China could significantly impact the AUD. However, similar measures for Mexico and Canada have yet to be finalized.

Further weighing on the Aussie Dollar, the Reserve Bank of Australia’s (RBA) February Meeting Minutes highlighted downside risks to the economy. While the Board acknowledged labor market strength as a key reason to maintain interest rates, it noted that the current tightness was inconsistent with the central bank’s 2.5% inflation target. As a result, policymakers saw a stronger case for potential rate cuts.

On the economic data front, Australia’s Retail Sales rose 0.3% month-over-month in January, recovering from a 0.1% decline in December. However, the ANZ-Roy Morgan Australian Consumer Confidence Index fell to 87.7 from the previous week's 89.8, when it had reached its highest level since May 2022.

Despite AUD weakness, downside pressure on the AUD/JPY cross could be limited as the Japanese Yen (JPY) struggles after Japan’s Unemployment Rate unexpectedly rose from 2.4% to 2.5% in January, while corporate spending on plants and equipment declined by 0.2% in Q4.

Meanwhile, Japan’s Finance Minister, Katsunobu Kato, reaffirmed that the country is not actively seeking to devalue its currency, emphasizing Japan’s "basic stance on currency policy." Additionally, Economy Minister Ryosei Akazawa stated that government intervention in the currency market only occurs in response to "speculative" movements.