- AUD/JPY recovers from a two-month low at 95.50 recorded on Thursday.
- A Reuters Poll expects RBA to maintain its current interest rate of 4.35% in the February meeting.
- The previous week’s foreign investment might have supported the Japanese Yen.
AUD/JPY continues to gain ground, recovering from the two-month low at 95.50 observed in the previous session. The cross trades higher around 96.80 during the European session on Friday. The Australian Dollar (AUD) has found support from an improved Australian money market, contributing to the strength of the AUD/JPY cross.
Furthermore, the better-than-expected Producer Price Index (PPI) data from Australia underpinned the Aussie Dollar, subsequently underpinning the AUD/JPY cross. The Australian Bureau of Statistics has released the PPI (YoY) for the fourth quarter, reporting an improvement with a growth rate of 4.1%, surpassing the previous growth of 3.8%.
On Thursday, a Reuters Poll showed an expectation that the Reserve Bank of Australia (RBA) could maintain the current interest rate of 4.35% in its upcoming February meeting. Furthermore, former RBA board member Warwick McKibbin suggested that the Australian cash rate may remain around 4.5% for an extended period.
The Australian Dollar has faced challenges, as bond traders have increased their expectations of early interest rate cuts by the Reserve Bank of Australia (RBA) following an unexpectedly weak quarterly inflation report. Futures markets are fully pricing in 50 basis points reductions in 2024, with the first adjustment anticipated in August.
The Bank of Japan's (BoJ) hawkish stance has provided support for the Japanese Yen (JPY). Additionally, the escalated geopolitical tensions in the Middle East might have driven the investors towards the safe-haven Japanese Yen, consequently capping the advances of the AUD/JPY cross.
The Japanese Yen might have gained support from the influx of foreign investment. For the week ending January 26, Foreign Bond Investment in Japan recorded inflows of ¥382.9 billion, a significant turnaround from the previous week's outflows of ¥43.5 billion. Additionally, Foreign Investment in Japanese Stocks rebounded during the same week, rising to ¥720.3 billion compared to the previous week's ¥287 billion.
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. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD retreats toward 1.0850 on modest USD recovery
EUR/USD stays under modest bearish pressure and trades in negative territory at around 1.0850 after closing modestly lower on Thursday. In the absence of macroeconomic data releases, investors will continue to pay close attention to comments from Federal Reserve officials.
GBP/USD holds above 1.2650 following earlier decline
GBP/USD edges higher after falling to a daily low below 1.2650 in the European session on Friday. The US Dollar holds its ground following the selloff seen after April inflation data and makes it difficult for the pair to extend its rebound. Fed policymakers are scheduled to speak later in the day.
Gold climbs to multi-week highs above $2,400
Gold gathered bullish momentum and touched its highest level in nearly a month above $2,400. Although the benchmark 10-year US yield holds steady at around 4.4%, the cautious market stance supports XAU/USD heading into the weekend.
Chainlink social dominance hits six-month peak as LINK extends gains
-637336005550289133_XtraSmall.jpg)
Chainlink (LINK) social dominance increased sharply on Friday, exceeding levels seen in the past six months, along with the token’s price rally that started on Wednesday.
Week ahead: Flash PMIs, UK and Japan CPIs in focus – RBNZ to hold rates
After cool US CPI, attention shifts to UK and Japanese inflation. Flash PMIs will be watched too amid signs of a rebound in Europe. Fed to stay in the spotlight as plethora of speakers, minutes on tap.