Australian Dollar languishes near April low as joint US-Japan intervention lifts Yen
- AUD/JPY attracts heavy sellers for the fifth consecutive day amid a broadly firmer JPY.
- Japan-US confirm a bilateral FX intervention, prompting aggressive JPY short-covering.
- Reduced RBA rate hike bets and China’s dismal PMI keep AUD bulls on the defensive.
The AUD/JPY cross turns lower for the fifth straight day after a modest uptick to the 111.20 region on Monday and drops to its lowest level since early April during the Asian session. Spot prices currently trade around the 110.00 psychological mark, down over 0.50% for the day, and seem vulnerable to extending last week's sharp retracement slide from the highest level since early June.
Japan's Finance Minister Satsuki Katayama confirmed on Monday that Japanese authorities conducted a rare, bilateral foreign exchange market intervention with the US on Friday to halt the Japanese Yen's (JPY) decline. Moreover, US Treasury Secretary Scott Bessent said on Sunday that Washington would not hesitate to participate in further coordinated action if disorderly moves in the JPY persist. This prompts aggressive follow-through JPY short-covering and turns out to be a key factor exerting pressure on the AUD/JPY cross.
Meanwhile, the Bank of Japan (BoJ) maintained a hawkish bias at the end of the July meeting on Friday and showed readiness to continue pushing up borrowing costs, lending additional support to the JPY. The Australian Dollar (AUD), on the other hand, struggles to lure buyers amid diminishing odds for an immediate rate hike by the Reserve Bank of Australia (RBA). Moreover, the disappointing release of China's RatingDog Manufacturing PMI keeps AUD bulls on the back foot and validates the negative outlook for the AUD/JPY cross.
According to TD Securities, Governor Ueda’s latest remarks marked a clear shift in tone, with the bank observing that he “sounded the most hawkish that he's been in a long while.” Strategists note that his guidance came “just close to short of forward guidance that September is a done deal for a 25bps hike,” underscoring the market’s growing conviction that the BoJ could move again as soon as next month.
Strategists at Deutsche Bank highlight that the latest inflation data have tempered expectations for further RBA tightening, noting that annual core inflation “edged up from +3.5% to +3.6%, but remained below the consensus estimate of +3.7%, reducing the urgency for additional interest rate hikes after the RBA already raised rates three times this year.” This softer-than-expected core print, alongside weaker headline inflation, is seen as diminishing the case for near-term policy action and weighing on the Aussie.
Japanese Yen Price Last 7 Days
The table below shows the percentage change of Japanese Yen (JPY) against listed major currencies last 7 days. Japanese Yen was the strongest against the US Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -1.19% | -1.04% | -4.47% | -0.41% | -0.49% | -1.50% | -0.91% | |
| EUR | 1.19% | 0.14% | -3.34% | 0.79% | 0.71% | -0.32% | 0.28% | |
| GBP | 1.04% | -0.14% | -3.58% | 0.65% | 0.57% | -0.47% | 0.14% | |
| JPY | 4.47% | 3.34% | 3.58% | 4.23% | 4.15% | 3.09% | 3.62% | |
| CAD | 0.41% | -0.79% | -0.65% | -4.23% | -0.10% | -1.09% | -0.50% | |
| AUD | 0.49% | -0.71% | -0.57% | -4.15% | 0.10% | -1.02% | -0.43% | |
| NZD | 1.50% | 0.32% | 0.47% | -3.09% | 1.09% | 1.02% | 0.60% | |
| CHF | 0.91% | -0.28% | -0.14% | -3.62% | 0.50% | 0.43% | -0.60% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Japanese Yen from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent JPY (base)/USD (quote).
Author
Haresh Menghani
FXStreet
Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.
