In a significant shift, the AUD/JPY currency pair has dipped below 96.50, with market caution and robust Japan’s PPI data fueling the downward movement. Traders are treading carefully in anticipation of the US CPI report, causing ripples in the forex market.
The Australian Dollar has come under pressure following comments from RBA Governor Michele Bullock. Bullock, in the post-meeting conference on Tuesday, noted that while upside inflation risks have moderated, they still remain, necessitating continued vigilance. The RBA’s decision to hold the Official Cash Rate steady at 4.35% in its December meeting also contributed to the Aussie Dollar’s challenges. Bullock emphasized that the central bank will closely monitor economic data, especially employment figures, for future policy cues.
Conversely, the Japanese Yen has strengthened on the back of a strong Producer Price Index. The data has raised expectations of potential rate hikes by the Bank of Japan. However, the path forward for the BoJ remains uncertain. Governor Kazuo Ueda’s indication that a rate hike may be nearing, supported by underlying inflation figures, clashes with dovish board member Toyoaki Nakamura’s caution against premature increases.
For the second consecutive day, AUD/JPY has been losing ground, trading around 96.30 during early European trading hours on Wednesday. The risk-sensitive Australian Dollar is facing headwinds against major counterparts due to the prevailing market caution ahead of the crucial US November CPI data release later in the North American session.
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