The AUD/JPY cross faced selling pressure following a rise during the Asian session on Tuesday, halting the overnight rebound from the 103.60-103.55 range, a multi-day low. Spot prices remain cautious, trading just above the 104.00 mark after the Reserve Bank of Australia (RBA) announced its latest policy decision.
As widely expected, the RBA maintained the Official Cash Rate (OCR) at a 12-year high of 4.35% for the fifth consecutive meeting in June, retaining a hawkish stance. The central bank is anticipated to keep the possibility of a rate hike open this year, given persistent inflation, which could bolster the Australian Dollar (AUD) and support the AUD/JPY cross.
On Monday, data from China highlighted a sluggish recovery in the world’s second-largest economy, overshadowing the RBA’s high-interest-rate narrative and weakening antipodean currencies, including the Aussie. Concurrently, the Japanese Yen (JPY) gained strength from Bank of Japan (BoJ) Governor Kazuo Ueda’s comments that the central bank might raise rates in July, contingent on economic data.
Further weighing on the AUD/JPY pair are speculations of potential Japanese government intervention to support the domestic currency. However, a generally positive risk sentiment, which typically reduces demand for the safe-haven JPY and supports the risk-sensitive AUD, may help mitigate any significant decline ahead of RBA Governor Michele Bullock’s press conference at 05:30 GMT.
Related Topics:
