AUD/JPY stretches lower to near 98.70 influenced by prevailing risk-off sentiment

AUD/JPY edges lower to near 98.70 during the European session on Wednesday. The prevailing risk-off sentiment bolsters demand for the safe-haven Japanese Yen (JPY). Moreover, investors are exercising caution amidst speculation that Japanese authorities may intervene in the markets to prevent a notable depreciation of the Yen.

Despite this, the Bank of Japan's (BoJ) cautious approach towards further policy tightening failed to kindle bullish sentiment or generate significant momentum. Although the Japanese Yen (JPY) encountered difficulties in sustaining its strength in the current market environment.

The Australian Dollar (AUD) faces difficulties attributed to the decline in the ASX 200 Index, consequently exerting downward pressure on the AUD/JPY cross. However, the Australian Industry Group (AiG) Industry Index displayed improvement in February, rising to a reading of -5.3 from the previous -14.9. Similarly, the AiG Manufacturing PMI recorded -7, compared to the prior reading of -12.6.

In the Reserve Bank of Australia (RBA) March minutes, the board indicated that they did not consider the option of raising interest rates. Despite acknowledging the uncertain economic outlook, the board perceived the risks to be generally balanced. Additionally, the board highlighted that it would take "some time" before they could express confidence in inflation returning to the target level.

Additionally, Westpac's summary of the Reserve Bank of Australia (RBA) March meeting minutes stated the current cash rate level is deemed appropriate for the prevailing circumstances, although conditions are subject to potential changes in the future.