AUD/JPY holds gains near 97.00 despite increased safe-haven demand

FXStreet
Updated
Mitrade
coverImg
Source: DepositPhotos

  • AUD/JPY maintains its position as traders expect the RBA to maintain the current interest rates in August.

  • The upside of the AUD/JPY cross may be capped amid subdued market sentiment stemming from renewed tariff concerns.

  • Japan’s Liberal Democratic Party and Komeito could struggle to secure enough seats to retain their majority in upper house election.

AUD/JPY extends its winning streak for the third successive session, trading around 96.80 during the European hours on Monday. The currency cross appreciates as the Australian Dollar (AUD) gains ground amid rising odds of the Reserve Bank of Australia (RBA) maintaining the interest rates in August to get inflation on track to sustainably return to the 2-1/2% target.

RBA Governor Michele Bullock stated that inflation risks persist, citing the elevated unit labor costs and weak productivity as factors that could drive inflation above current projections. Meanwhile, RBA Deputy Governor Andrew Hauser highlighted growing global economic uncertainty and warned that the impact of tariffs on the world economy could be significant.

However, the upside of AUD/JPY cross could be limited as the AUD may struggle due to dampened market sentiment, driven by the new tariff concerns. Furthermore, increased safe-haven demand would support the Japanese Yen (JPY) and cap the upside of the currency cross.

US President Donald Trump announced, on Saturday, a 30% tariff on imports from the European Union (EU) and Mexico starting August 1. Trump also proposed a blanket tariff rate of 15%-20% on other trading partners, an increase from the current 10% baseline rate. Reports also indicated that the EU has initiated discussions with other countries hit by the tariffs, including Canada and Japan, to explore coordinated responses.

The JPY struggles amid rising fiscal concerns. Market speculation are growing that policymakers may pursue expanded fiscal spending to support the economy, including a potential cut to the consumption tax.

Meanwhile, recent media polls raised doubts about whether Japan's ruling coalition of the Liberal Democratic Party (LDP) and Komeito will be able to secure enough seats to maintain their majority at the upper house election on July 20.

* The content presented above, whether from a third party or not, is considered as general advice only.  This article should not be construed as containing investment advice, investment recommendations, an offer of or solicitation for any transactions in financial instruments.

goTop
quote
Do you find this article useful?
Related Articles
placeholder
Pound Sterling refreshes two-week low as traders trim Fed dovish betsThe Pound Sterling (GBP) posts a fresh two-week low around 1.3400 against the US Dollar (USD) during the European trading session on Friday.
Author  FXStreet
Aug 22, Fri
The Pound Sterling (GBP) posts a fresh two-week low around 1.3400 against the US Dollar (USD) during the European trading session on Friday.
placeholder
Forex Today: US Dollar extends weekly uptrend ahead of Powell speech at Jackson HoleThe US Dollar (USD) stays resilient against its rivals early Friday after posting decisive gains on Thursday.
Author  FXStreet
Aug 22, Fri
The US Dollar (USD) stays resilient against its rivals early Friday after posting decisive gains on Thursday.
placeholder
NZD/USD extends downside to near 0.5800 as traders brace for Powell’s Jackson Hole remarksThe NZD/USD pair remains under selling pressure near 0.5805 during the early European trading hours on Friday.
Author  FXStreet
Aug 22, Fri
The NZD/USD pair remains under selling pressure near 0.5805 during the early European trading hours on Friday.
placeholder
US Dollar Index rises to near 99.00 on fading Fed rate cut odds, Powell’s speech awaitedThe US Dollar Index (DXY) is extending its gains for the second successive session and trading around 98.80 during the Asian hours on Friday.
Author  FXStreet
Aug 22, Fri
The US Dollar Index (DXY) is extending its gains for the second successive session and trading around 98.80 during the Asian hours on Friday.
placeholder
EUR/USD weakens below 1.1600, all eyes on Jackson Hole SymposiumThe EUR/USD pair attracts some sellers to around 1.1595 during the Asian trading hours on Friday.
Author  FXStreet
Aug 22, Fri
The EUR/USD pair attracts some sellers to around 1.1595 during the Asian trading hours on Friday.
Real-time Quote