Key Points:
- AUD/JPY is currently at 104.65, reflecting an upward trend after BoJ’s policy decision.
- BoJ maintained the policy rate at 0%, leading to yen depreciation and increased selling.
- Board member Nakamura calls for reassessment in July, indicating internal debate.
As of today, the AUD/JPY cross is valued at 104.65 during Asian trading hours, experiencing a slight uptick. The Bank of Japan’s (BoJ) most recent policy actions, which have greatly impacted market sentiment, are mostly to blame for this change. The Japanese yen has attracted sellers following the BoJ’s recent announcements, influencing the currency pair’s dynamics and contributing to the AUD/JPY’s upward trajectory.
BoJ Maintains 0% Rate, Influencing AUD/JPY Rise.
In a widely anticipated move, the BoJ decided to maintain its policy rate at 0%, a stance it has upheld for two consecutive meetings. This decision emerged from June’s two-day monetary policy review, aligning with market expectations. The BoJ’s choice not to reduce bond purchases further reinforced its accommodative monetary stance. Despite some internal dissent, notably from Toyoaki Nakamura, who argued for a reassessment of economic activity and price developments in the upcoming July 2024 outlook report, the central bank’s majority consensus prevailed.
Internal BoJ Debate on Policy Amid Yen Selling
The BoJ’s policy rate decision and continuing its bond purchase programme have increased selling pressure on the yen. Traders and investors left the yen for higher yields elsewhere due to the central bank’s dovish stance. This shift has bolstered the Australian dollar against the yen, contributing to the recent AUD/JPY cross rise. The yen’s depreciation directly reflects market participants’ response to the BoJ’s policies, which aim to support Japan’s economic recovery amid ongoing global uncertainties.
RBA Decision Looms, 90% Expect No Rate Change in June
Next week, the RBA will decide on interest rates. Analysts overwhelmingly predict that the RBA will maintain its current rate in June, with nearly 90% expecting no change. However, the majority also foresee a rate cut of 25 basis points by the end of the year, potentially bringing the target rate down to 4.10%. This forecast is based on the expectation of continued high inflation. Consequently, the RBA is expected to keep rates elevated for a prolonged period. This measure aims to manage inflationary pressures effectively.
