AUD/JPY rises to near 98.50 as RBA could maintain its current rates throughout 2024
|- AUD/JPY extends gains on hawkish market sentiment about RBA interest rates trajectory.
- The Australian Dollar faces pressure as the S&P/ASX 200 halted its winning streak on Tuesday.
- Japanese official Atsushi Mimura talked about connecting to other countries regarding FX intervention.
AUD/JPY continues its upward trajectory for the fifth consecutive session on Tuesday, with the pair edging higher around 98.50 during European trading hours. The Australian Dollar (AUD) receives support against the Japanese Yen (JPY) as market sentiment leans towards the expectation of a resilient Australian economy, backed by low unemployment and healthy corporate sector balance sheets. Westpac anticipates that the Reserve Bank of Australia (RBA) will maintain its current monetary policy stance throughout 2024 and adopt a less restrictive approach in 2025.
However, the Australian Dollar (AUD) faced downward pressure from a weaker Aussie money market. The S&P/ASX 200 index halted its winning streak, with declines in mining and energy stocks amid weaker commodity prices, potentially limiting the advance of the AUD/JPY cross.
The Reserve Bank of Australia (RBA) released the minutes from its February monetary policy meeting. During the meeting, the RBA Board deliberated on the possibility of raising rates by 25 basis points (bps) or keeping rates unchanged.
Although recent data provided the board with increased confidence that inflation would return to target within a reasonable timeframe, there was acknowledgment that it would "take some time" before the board could be sufficiently confident about inflation. As a result, the board agreed that it was appropriate not to rule out another rate hike, indicating a cautious approach to future monetary policy decisions.
On Japan’s side, Japanese Finance Ministry official Atsushi Mimura said that the government is in communication with other countries regarding FX intervention." He mentioned that the government can sell assets such as savings and foreign bonds in FX reserves when intervention is required.
Furthermore, Finance Minister Shunichi Suzuki expressed concerns about the negative implications of a weak Yen. In an earlier interview, Suzuki noted, "The Bank of Japan (BoJ) holds jurisdiction over monetary policy. But there will come a time when interest rates rise." Market participants are likely to focus on Japan’s Trade Balance data, including Import and Export figures for January, which are scheduled to be released on Wednesday.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.