During Wednesday’s European session, the AUD/JPY pair dipped to around 98.70, influenced by prevailing risk-off sentiment favoring the safe-haven Japanese Yen (JPY). Market caution persists amid speculation regarding potential Japanese authorities’ intervention to stem significant Yen depreciation.
Despite the cautious stance of the Bank of Japan (BoJ) on further policy tightening, the JPY’s strength struggled to gain traction in the current market climate.
The Australian Dollar (AUD) encountered headwinds, primarily due to the decline in the ASX 200 Index, exerting downward pressure on the AUD/JPY cross. However, there were signs of improvement in Australia’s economic indicators. The Australian Industry Group (AiG) Industry Index for February displayed an upward trend, climbing to -5.3 from the previous -14.9. Similarly, the AiG Manufacturing PMI rose to -7 from the previous -12.6.
The Reserve Bank of Australia (RBA) March minutes revealed the board’s decision not to consider raising interest rates, citing an uncertain economic outlook. Despite balanced perceived risks, the board indicated that it would take time before expressing confidence in inflation returning to target levels.
Westpac’s summary of the RBA’s March meeting minutes concurred that the current cash rate level is appropriate under present conditions, although acknowledging potential changes in the future.
