AUD/JPY extends winning streak toward 93.00 as risk sentiment dents Yen appeal

AUD/JPY climbs nearly 1% to trade near 93.00 in late US session.
Risk-on flows and easing trade tensions weigh on safe-haven Yen
Key inflation data from Australia and Japan is eyed midweek.

Vishal Chaturvedi FXStreet

The Australian Dollar (AUD) strengthens against the Japanese Yen (JPY), extending modest gains for the third consecutive day. At the time of writing, the AUD/JPY cross is pushing higher to trade near 93.00 during the late American sessions on Tuesday, up nearly 1% on the day.

The Aussie is drawing support from a marginally weak Japanese Yen amid a broad improvement in market sentiment, which has reduced the appeal of traditional safe-haven assets, such as the Yen. Investors welcomed signs of easing trade tensions between the United States (US) and the European Union (EU), following President Trump’s decision to delay proposed tariffs on EU goods.

Meanwhile, the Japanese Yen remains under pressure despite hawkish rhetoric from the Bank of Japan (BoJ). Domestic bond yields slipped after reports that the Ministry of Finance may scale back issuance of 20 and 40-year debt to ease upward pressure on long-term yields. The adjustment comes after a poorly received 20-year bond auction last week, which saw the weakest demand in over a decade. The news also triggered a broader dip in global yields, including US Treasuries, though the US Dollar regained some ground on improved risk sentiment, which compounded downward pressure on the Yen.

That said, market participants continue to weigh the prospects for the Bank of Japan’s policy normalization. On Tuesday, BoJ Governor Kazuo Ueda reaffirmed the central bank’s readiness to “adjust the degree of monetary easing as needed” to ensure inflation targets are achieved. Governor Ueda also flagged upside risks to core inflation stemming from persistently high food prices, adding weight to speculation that the BoJ could move further along the path of policy normalization later this year.

Looking ahead, traders will focus on inflation data from both Australia and Japan, with Australia’s CPI due Wednesday and Japan’s national CPI on Thursday. The releases could influence rate expectations for both the RBA and BoJ, and may drive fresh volatility in AUD/JPY.

Economic Indicator

Consumer Price Index (YoY)

The Consumer Price Index (CPI), released by the Australian Bureau of Statistics on a quarterly basis, measures the changes in the price of a fixed basket of goods and services acquired by household consumers. The CPI is a key indicator to measure inflation and changes in purchasing trends. The YoY reading compares prices in the reference quarter to the same quarter a year earlier. A high reading is seen as bullish for the Australian Dollar (AUD), while a low reading is seen as bearish.

Why it matters to traders?

The quarterly Consumer Price Index (CPI) published by the Australian Bureau of Statistics (ABS) has a significant impact on the market and the AUD valuation. The gauge is closely watched by the Reserve Bank of Australia (RBA), in order to achieve its inflation mandate, which has major monetary policy implications. Rising consumer prices tend to be AUD bullish, as the RBA could hike interest rates to maintain its inflation target. The data is released nearly 25 days after the quarter ends.

Author

Vishal Chaturvedi

FXStreet

I am a macro-focused research analyst with over four years of experience covering forex and commodities market. I enjoy breaking down complex economic trends and turning them into clear, actionable insights that help traders stay ahead of the curve.

AUD/USD hangs near three-week low, below 0.6950 as traders await US NFP report

AUD/USD hits a three-week low during the Asian session on Friday as the RBA’s dovish shift and a rout in equity markets weigh on the risk-sensitive Aussie. However, the recent slump in US bond yields to a two-month low keeps US Dollar bulls on the back foot and limits losses for the currency pair as traders look to the US NFP report for a fresh impetus.

USD/JPY bounces off three-week low; keeps the red near 157.65 as focus remains on US NFP

USD/JPY bounces off the weekly low set during the Asian session, as bears turn cautious ahead of the US NFP report due later this Friday. The upside seems limited as the recent slump in US bond yields and hopes of Iran war de-escalation undermine the US Dollar. Moreover, a hawkish BoJ and intervention risks support the Japanese Yen, capping the pair.

Gold loses the grip; $4,000 comes next on the downside

Gold sets aside two daily advances in a row on Friday, opening the door to a potential test of the key $4,000 mark per troy ounce. The precious metal’s retracement follows a decent improvement in the sentiment surrounding the US Dollar, solid NFP data and higher US Treasury yields across the board.

Democrats win House and Senate in US midterms: Why isn’t all bad news for crypto

The biggest story this week was Tuesday’s US midterm elections, which saw Democrats win control of both the House and the Senate in a clear blue wave. This political shift in the US has triggered sharp price swings across the cryptocurrency market.

Week ahead – Inflation and geopolitics in focus as US political landscape shifts

Post-midterm election euphoria fizzles out as risk aversion prevails. US CPI, PPI and Fedspeak on the radar as Fed hike bets remain supported. Oil retreat pauses on mixed hopes about the ongoing conflicts.

US Dollar breaks below 101.50 as Democrats sweep Congress

The US Dollar (USD) comes under heavy selling pressure on Wednesday, with the US Dollar Index (DXY) falling around 0.5% to trade near 101.35 after sliding below the 101.50 level. The Greenback retreats to its lowest level in four weeks as investors reassess the political and economic outlook following the Democratic Party's sweeping victory in the United States (US) midterm elections.