The AUD/JPY Cross: Market Analysis

  • Current Trends: AUD/JPY climbs to over a one-week high, struggling to maintain momentum.
  • Factors at Play: BoJ rate hike uncertainty, risk-on mood, RBA’s hawkish stance, and Chinese recovery optimism.

Market Movement

The AUD/JPY cross has seen a second consecutive day of buying, reaching a one-week high during the Asian session. However, the momentum has been difficult to sustain, with prices hovering around the 101.00 round figure and moving towards the 200-day Simple Moving Average (SMA).

Factors Influencing the Market

The Japanese Yen (JPY) is underperforming, partly due to uncertainty surrounding the Bank of Japan’s (BoJ) rate hike prospects. Additionally, a risk-on sentiment following the US election results, which favored former President Donald Trump, has weighed on the safe-haven JPY, providing support to the AUD/JPY cross.

On the other hand, recent Chinese PMI data and the RBA’s hawkish stance have boosted optimism for the Australian Dollar (AUD). The Chinese government’s stimulus efforts and improving business conditions, coupled with the RBA’s positive outlook, have contributed to the strength of the AUD/JPY cross.

Technical Analysis

Despite recent price movements, the AUD/JPY pair has been range-bound, indicating indecision among traders. With a mixed fundamental backdrop, it is advisable to wait for strong follow-through buying before considering a position in anticipation of a continuation of the uptrend from September’s low.

Bank of Japan FAQs

The Bank of Japan (BoJ) is the central bank of Japan, responsible for setting monetary policy to ensure price stability and achieve an inflation target of around 2%. Here are some frequently asked questions about the BoJ:

What is the Role of the Bank of Japan?

The BoJ issues banknotes, conducts currency and monetary control, and aims to maintain price stability through its monetary policy decisions.

What Monetary Policies Has the Bank of Japan Implemented?

The BoJ has utilized Quantitative and Qualitative Easing (QQE) to stimulate the economy by buying assets like government bonds. In 2016, it introduced negative interest rates and controlled bond yields. In 2024, the BoJ lifted interest rates, moving away from its ultra-loose policy.

How Has BoJ’s Policy Affected the Yen?

The BoJ’s stimulus measures led to a weaker Yen against other currencies, especially as other central banks raised interest rates. This trend reversed slightly in 2024 when the BoJ shifted its policy stance.

What Impact Did BoJ’s Policies Have on Inflation?

The BoJ’s policies, along with global energy price spikes, contributed to inflation exceeding the 2% target. Rising salaries in Japan also fueled inflation, impacting the economy.

Shares: