The Australian dollar (AUD) has recently faced pressure due to dismal trade figures, notably a significant decline in exports that reduced Australia's trade surplus to its lowest in over seven years. Market analysts expect that upcoming PMIs could further weigh on the AUD, as a slowdown in private sector growth is anticipated. This backdrop of economic uncertainty has contributed to subdued demand for the AUD.
In recent developments, the Reserve Bank of Australia (RBA) maintained its cash rate at 3.60%, amid concerns about persistent inflation risks. The Australian dollar, often influenced by commodity prices, has struggled, particularly in light of global trade tensions and fluctuations in key export commodities. As the largest trading partner, China's economic performance plays a critical role for the AUD, with analysts closely watching China's stimulus measures for potential impacts on demand for Australian exports. Overall, expectations suggest ongoing vulnerability for the AUD as it navigates these multifaceted challenges.
Meanwhile, the Japanese yen (JPY) has reacted to a pivotal policy shift from the Bank of Japan (BOJ), with indications that interest rates may be poised for a hike following unexpected calls from board members. This shift, along with predictions of multiple future rate hikes, is seen as a response to rising inflation and strong corporate profits. However, political uncertainty following Prime Minister Ishiba's resignation has exerted downward pressure on the yen, as concerns grow over potential changes in leadership and policy direction.
The AUD/JPY cross has recently hit 90-day highs around 98.63, reflecting a 2.0% increase above its three-month average of 96.7, and maintaining a stable trading range from 94.69 to 98.63. In terms of external influences, oil prices have remained volatile, currently trading at 65.22, approximately 3.9% below its three-month average. As fluctuations in oil prices can indirectly influence the JPY, particularly through trade dynamics, market participants may want to keep an eye on oil trends as they assess the relative strength of AUD against JPY.
Overall, the coming weeks will likely see further volatility in the AUD/JPY exchange rate as both currencies respond to domestic economic indicators, global commodity prices, and shifting monetary policies.
