AUD/JPY hits one-week low amid mixed RBA minutes, JPY strength
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The AUD/JPY cross attracts sellers for the second consecutive day on Tuesday and retreats further from a one-year peak, around the 101.80 region, touched last week. The downward trajectory is sponsored by a combination of factors and drags spot prices closer to the 100.00 psychological mark or a one-week low during the Asian session. The minutes of the Reserve Bank of Australia’s (RBA) November meeting showed that policymakers were growing increasingly cautious over future interest rate cuts amid sticky inflation and signs of resilience in the labor market. The RBA, however, said that further policy easing is still possible if growth weakens. This, in turn, undermines the Australian Dollar (AUD), which, along with the emergence of some buying around the Japanese Yen (JPY), exerts downward pressure on the AUD/JPY cross. The recent decline in the JPY prompted some verbal intervention from Japan’s Finance Minister Satsuki Katayama, saying that we have been alarmed by the recent one-sided, rapid moves in the foreign exchange market. This, along with the prevalent risk-off mood, benefits the JPY’s relative safe-haven status against the perceived riskier Aussie and contributes to the AUD/JPY pair’s downfall. However, the uncertainty around the Bank of Japan’s (BoJ) tightening path could cap the upside for the JPY. Nikkei Asia reported late Monday that Japan’s Prime Minister Sanae Takaichi will launch tax-reform talks this week, aiming to cut certain taxes to stimulate investment and consumption. This adds to concerns about the government’s long-term fiscal health. Furthermore, Japan’s weak Q3 GDP print on Monday could put additional pressure on the BoJ to delay raising interest rates. This might hold back the JPY bulls from placing aggressive bets and help limit deeper losses for the AUD/JPY cross. RBA FAQs The Reserve Bank of Australia (RBA) sets interest rates and manages monetary policy for Australia.…
