- AUD/JPY rises amid uncertainty over when the Bank of Japan will deliver its next rate hike.
- Japanese officials rejected US Treasury Secretary Bessent’s claim the BoJ is ‘behind the curve,’ calling it pressure to hike.
- The AUD finds support as upbeat Australian jobs data reduces the urgency for an RBA rate cut in September.
AUD/JPY appreciates after registering losses in the previous two consecutive sessions, trading around 96.10 during the Asian hours on Monday. The currency cross gains ground as the Japanese Yen (JPY) struggles amid ongoing uncertainty over the likely timing of the next interest rate hike by the Bank of Japan (BoJ).
Japan’s economy outpaced forecasts in the second quarter, lifted by net exports despite headwinds from US tariffs. Japan’s Economy Minister Ryosei Akazawa stated on Friday that the economy is recovering modestly. However, Akazawa highlighted that risks from US trade policies could weigh on domestic growth, while rising prices could dampen consumer sentiment and hurt private consumption.
Meanwhile, Japanese officials dismissed US Treasury Secretary Scott Bessent’s claim that the Bank of Japan is ‘behind the curve,’ framing it as pressure to hike rates. However, BoJ Governor Kazuo Ueda maintained caution, stressing underlying inflation remains below the 2% target.
The AUD/JPY cross also draw support from improved Australian Dollar (AUD) following an upbeat jobs data for July. The recent employment figures eased concerns about a weakening labor market, lessening the urgency for the Reserve Bank of Australia (RBA) to continue with another rate cut in September.
RBA Governor Michele Bullock stated last week that current forecasts suggest the cash rate may need to be reduced to ensure price stability. However, Bullock emphasized the Board’s meeting-by-meeting approach and refrained from making any commitments on rate moves should financial markets experience a bout of volatility.
