AUD/JPY Surges as RBA Remains Hawkish Amid BoJ Rate-Hike Uncertainty
The AUD/JPY pair is on the rise as the Japanese Yen weakens and the Reserve Bank of Australia (RBA) holds a hawkish stance, hinting at potential interest rate hikes. Geopolitical risks and a cautious risk sentiment, however, may limit significant gains.
During the Asian session on Wednesday, the AUD/JPY pair has seen an uptick, pausing the previous day’s decline from the 99.00 level. Currently trading around 98.20, up by 0.20%, the pair remains within a narrow range established over the past week.
The Australian Dollar is being supported by the RBA’s willingness to raise rates in response to inflation risks. Additionally, talks of substantial economic stimulus from China are boosting the Aussie. On the other hand, the Japanese Yen is facing selling pressure, helping the AUD/JPY pair climb higher.
Uncertainty surrounding the Japanese Prime Minister’s resignation may delay the Bank of Japan’s rate-hike plans, weighing on the Yen. Despite this, investors anticipate a rate hike in Japan later this year due to improving economic conditions. Geopolitical tensions and a slightly negative global risk sentiment could prevent significant Yen depreciation, thus capping gains for the AUD/JPY pair.
It is advisable to wait for a clear breakout from the current range before considering further positions, especially after the pair rebounded from a one-year low in August.
Analysis:
The AUD/JPY pair is experiencing a bullish trend driven by the RBA’s hawkish stance and weakening Japanese Yen. However, geopolitical uncertainties and cautious market sentiment may limit significant gains. Investors should monitor developments in Japan and China, as well as global geopolitical events, to gauge potential impacts on the AUD/JPY pair. Waiting for a confirmed breakout from the current range before making trading decisions could be a prudent approach for investors looking to capitalize on the pair’s movements.