AUD/JPY continued to fall for the second consecutive day, trading around 96.30 during early European trading on Wednesday. The risk-sensitive Australian dollar (AUD) faces challenges against major currencies amid caution ahead of key U.S. November consumer price index (CPI) data later in the North American session.
The downside in the AUD/JPY cross may be due to AUD weakness following RBA Governor Michele Bullock’s less hawkish speech at Tuesday’s post-meeting meeting .
Reserve Bank of Australia Governor Bullock stressed that although upward inflation risks have eased, these risks still exist and continued vigilance is required. Bullock also said that the Reserve Bank of Australia will pay close attention to all economic data, including employment data, to guide future policy decisions. The Reserve Bank of Australia decided to keep the official cash rate (OCR) unchanged at 4.35% at its last policy meeting in December.
The AUD/JPY pair came under downward pressure as the Japanese yen (JPY) strengthened on strong producer price index (PPI) data, suggesting the Bank of Japan (BoJ) may tighten policy further.
However, the yen lacks strong bullish momentum amid lingering uncertainty over whether the Bank of Japan is willing to hike interest rates again in December. While Bank of Japan Governor Kazuo Ueda recently suggested that the next rate hike is approaching on the back of solid underlying inflation data, dovish BOJ board member Toyoaki Nakamura has warned against raising rates too early, adding to the People’s doubts about the direction of the Bank of Japan’s policy.
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