The AUD/JPY cross attracts fresh sellers following the post-Reserve Bank of Australia (RBA) uptick to the 110.70 region and drops to an over two-week low during the early part of the European session on Tuesday. Spot prices currently trade just below the 110.00 psychological mark, down around 0.45% for the day, and remain within striking distance of the monthly trough amid a combination of negative factors.
Traders reacted little to the RBA's 25 basis points (bps) rate hike earlier today as the decision was already priced in the market. The Australian Dollar (AUD), however, turned lower as RBA Governor Michele Bullock, speaking at the post-meeting press conference, failed to reinforce expectations that inflation developments were likely to require additional tightening. Traders were quick to trim their bets for more rate hikes, undermining the AUD and exerting pressure on the AUD/JPY cross.
Meanwhile, Japan's top currency diplomat Atsushi Mimura and Finance Minister Satsuki Katayama warned markets to take joint US-Japan messaging on FX depreciation seriously. In fact, US President Donald Trump conveyed his concerns about the Japanese Yen's (JPY) depreciation to Prime Minister Sanae Takaichi on the sidelines of the United Nations General Assembly. Apart from this, hawkish Bank of Japan (BoJ) bets favor JPY bulls, backing the case for a further AUD/JPY decline.
In fact, Minutes from the BoJ's July monetary policy meeting, released on Monday, revealed that policymakers debated the need for faster interest rate hikes amid growing concern over mounting inflation risks. This, in turn, lifted expectations that the BoJ will hike again as soon as October or December. In contrast, the RBA’s cautious stance could undermine the Aussie, suggesting that the path of least resistance for the AUD/JPY cross is to the downside and any attempted recovery is likely to be sold into.
The table below shows the percentage change of Australian Dollar (AUD) against listed major currencies today. Australian Dollar was the strongest against the New Zealand Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.24% | 0.18% | 0.03% | 0.13% | 0.41% | 0.33% | 0.28% | |
| EUR | -0.24% | -0.07% | -0.21% | -0.13% | 0.16% | 0.08% | 0.03% | |
| GBP | -0.18% | 0.07% | -0.15% | -0.03% | 0.22% | 0.15% | 0.09% | |
| JPY | -0.03% | 0.21% | 0.15% | 0.11% | 0.37% | 0.29% | 0.24% | |
| CAD | -0.13% | 0.13% | 0.03% | -0.11% | 0.26% | 0.19% | 0.14% | |
| AUD | -0.41% | -0.16% | -0.22% | -0.37% | -0.26% | -0.07% | -0.13% | |
| NZD | -0.33% | -0.08% | -0.15% | -0.29% | -0.19% | 0.07% | -0.05% | |
| CHF | -0.28% | -0.03% | -0.09% | -0.24% | -0.14% | 0.13% | 0.05% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Australian Dollar from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent AUD (base)/USD (quote).