AUD/JPY consolidates after paring losses as Iran denies reports of a foreign attack
- AUD/JPY recovers daily losses after Iranian media rejected the news of Israeli missiles striking a site in Iran on Friday.
- The Japanese Yen gained support from the hawkish remarks made by BoJ Governor Kazuo Ueda on Thursday.
- The Australian Dollar lost ground as soft domestic jobs data reinforced a dovish outlook on RBA’s monetary policy.
AUD/JPY continues to trade in the negative territory after paring intraday losses on Friday. The risk aversion sentiment evolved across financial markets, as ABC News reported that Israeli missiles had struck a site in Iran. Before that, the Japanese Yen faced a challenge after the release of Japan’s inflation data on Friday. The National Consumer Price Index (CPI) for March rose by 2.7% year-over-year, compared to a 2.8% increase in February, according to the latest data from the Japan Statistics Bureau. This index assesses the price fluctuations of goods and services bought by households.
The Japanese Yen (JPY) received upward support from the hawkish remarks made by Bank of Japan’s (BoJ) Governor Kazuo Ueda on Thursday. According to a Reuters report, Ueda mentioned in a press conference that the central bank might consider raising interest rates again if significant declines in the Yen substantially boost inflation. This underscores the influence that currency movements could have on the timing of the next policy shift.
The Australian Dollar (AUD) experienced losses, along with a decline in the ASX 200 Index on Friday. Additionally, Australia’s 10-year government bond yield dropped below 4.3%, stepping back from over four-month highs. This retreat was attributed to soft domestic jobs data, which reinforced a dovish outlook on the Reserve Bank of Australia’s (RBA) monetary policy.
Daily Digest Market Movers: AUD/JPY depreciates on dovish RBA outlook
- Japan’s National CPI, excluding fresh food but including fuel costs, increased 2.6% year-over-year in February, decelerating from a four-month high of 2.8% in January and falling below forecasts of 2.7%. The slowdown was attributed to mild increases in food prices, although it remained above the Bank of Japan’s 2% target due to the weakness of the Yen and high commodity prices.
- Bank of Japan board member Asahi Noguchi stated on Thursday that the pace of future rate hikes would probably be much slower than that of its global counterparts in recent policy tightening. This is because the impact of rising domestic wages has yet to be fully transmitted to prices, as reported by Reuters.
- Analysts at Rabobank suggested that stronger Japanese economic data, coupled with stronger expectations that the Bank of Japan (BoJ) may raise rates again later this year, would likely provide the Japanese Yen (JPY) with broad-based strength. They posit that if Japanese real household incomes turn positive later this year, there is a possibility of another BoJ rate hike.
- On Thursday, Australia’s Employment Change posted a reading of -6.6K for March, against the expected 7.2K and 117.6K prior. Australia’s Unemployment Rate rose to 3.8% in March, lower than the expected 3.9% but higher than the previous reading of 3.7%.
- According to a Westpac report, while the central bank signaled that rates are unlikely to be raised further, greater confidence in the inflation outlook is required before contemplating the possibility of rate cuts.
Technical Analysis: AUD/JPY remains below 99.00
The AUD/JPY traded around 98.20 on Friday. The breach below the significant support level of 98.65, coupled with the 14-day Relative Strength Index (RSI) persisting below the 50 level, indicates a bearish sentiment for the pair. The AUD/JPY cross could find immediate support at the psychological level of 98.00. A break below this level could lead the pair to approach the major level of 97.50. On the upside, the major level of 98.50 appears as the barrier, followed by the 50-day Exponential Moving Average (EMA). A breakthrough above the latter could support the AUD/JPY cross to explore the region around the psychological level of 99.00.
AUD/JPY: Daily Chart
Japanese Yen price today
The table below shows the percentage change of Japanese Yen (JPY) against listed major currencies today. Japanese Yen was the strongest against the New Zealand Dollar.
| USD | EUR | GBP | CAD | AUD | JPY | NZD | CHF | |
| USD | 0.05% | 0.15% | 0.08% | 0.29% | -0.12% | 0.36% | -0.40% | |
| EUR | -0.04% | 0.11% | 0.04% | 0.26% | -0.15% | 0.32% | -0.43% | |
| GBP | -0.15% | -0.10% | -0.07% | 0.15% | -0.26% | 0.21% | -0.55% | |
| CAD | -0.06% | -0.01% | 0.08% | 0.24% | -0.17% | 0.30% | -0.46% | |
| AUD | -0.30% | -0.25% | -0.15% | -0.22% | -0.41% | 0.01% | -0.70% | |
| JPY | 0.12% | 0.19% | 0.25% | 0.19% | 0.42% | 0.47% | -0.27% | |
| NZD | -0.35% | -0.31% | -0.21% | -0.30% | -0.06% | -0.49% | -0.75% | |
| CHF | 0.40% | 0.46% | 0.53% | 0.49% | 0.69% | 0.28% | 0.75% |
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 Euro from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent EUR (base)/JPY (quote).
Japanese Yen FAQs
The Japanese Yen (JPY) is one of the world’s most traded currencies. Its value is broadly determined by the performance of the Japanese economy, but more specifically by the Bank of Japan’s policy, the differential between Japanese and US bond yields, or risk sentiment among traders, among other factors.
One of the Bank of Japan’s mandates is currency control, so its moves are key for the Yen. The BoJ has directly intervened in currency markets sometimes, generally to lower the value of the Yen, although it refrains from doing it often due to political concerns of its main trading partners. The current BoJ ultra-loose monetary policy, based on massive stimulus to the economy, has caused the Yen to depreciate against its main currency peers. This process has been exacerbated more recently due to an increasing policy divergence between the Bank of Japan and other main central banks, which have opted to increase interest rates sharply to fight decades-high levels of inflation.
The BoJ’s stance of sticking to ultra-loose monetary policy has led to a widening policy divergence with other central banks, particularly with the US Federal Reserve. This supports a widening of the differential between the 10-year US and Japanese bonds, which favors the US Dollar against the Japanese Yen.
The Japanese Yen is often seen as a safe-haven investment. This means that in times of market stress, investors are more likely to put their money in the Japanese currency due to its supposed reliability and stability. Turbulent times are likely to strengthen the Yen’s value against other currencies seen as more risky to invest in.