The AUD/JPY currency pair remains steady at around 96.50 during early Asian trading hours on Wednesday, recovering from losses in the previous session. However, further upside for the pair appears limited after Australia’s Consumer Price Index (CPI) for January registered a 2.5% year-over-year increase, slightly below the market forecast of 2.6%.
Attention is now shifting towards potential developments in the ongoing trade tensions between the US and China. Reports from Bloomberg suggest that the Trump administration is considering tightening chip export controls to China, potentially affecting key Australian trading partner relations. This includes additional restrictions on companies such as Nvidia, SMIC, and CXMT, further escalating concerns surrounding tariffs and global trade.
On the other hand, the Japanese Yen (JPY) is finding support in a global risk-off sentiment and rising expectations of an interest rate hike by the Bank of Japan (BoJ). The BoJ is anticipated to raise rates from 0.50% to 0.75% later this year, with a 50% probability of an earlier hike in June, according to overnight index swaps.
Traders are also bracing for key economic data from Japan on Friday, which will include reports on industrial production, retail sales, and inflation in Tokyo. These figures could offer important clues regarding the BoJ’s future policy moves, adding further volatility to the AUD/JPY pair in the coming days.
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