AUD/JPY appreciates further beyond 109.00 mark, its highest level since May 1991


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  • AUD/JPY
    continues
    scaling
    higher
    for
    the
    third
    straight
    day
    and
    climbs
    to
    a
    fresh
    multi-decade
    high.

  • The
    risk-on
    mood
    undermines
    the
    safe-haven
    JPY
    and
    lends
    support
    amid
    hawkish
    RBA
    expectations.

  • Speculations
    that
    the
    BoJ
    may
    act
    soon
    in
    response
    to
    the
    weakening
    JPY
    and
    cap
    any
    further
    gains.

The
AUD/JPY
cross
gains
positive
traction
for
the
third
successive
day
and
climbs
to
its
highest
level
since
May
1991,
around
the
109.35
area
during
the
Asian
session
on
Thursday.
The
momentum
is
sponsored
by
a
combination
of
factors,
though
speculations
that
the
Bank
of
Japan
(BoJ)
may
raise
interest
rates
in
response
to
a
weakening
Japanese
Yen
(JPY)
might
cap
any
further
gains. 

Moreover,
a
Bloomberg
report
on
Tuesday
said
that
the

BoJ

is
conducting
three
in-person
meetings
with
banks,
securities
firms,
and
financial
institutions
to
assess
a
feasible
pace
for
scaling
back
its
purchases
of
Japanese
Government

Bonds
.
Meanwhile,
Reuters
reported
on
Wednesday

citing
unnamed
sources

that
the
BoJ
will
likely
trim
this
year’s
economic
growth
forecast
and
project
inflation
will
stay
around
its
2%
target
in
coming
years
at
its
meeting
later
this
month.
Adding
to
this,
the
prevalent
risk-on
environment,
which
tends
to
undermine
the
safe-haven
JPY
and
benefit
risk-sensitive
Aussie,
is
seen
acting
as
a
tailwind
for
the
AUD/JPY
cross. 

The
strong
move
up
could
further
be
attributed
to
bets
that
the
Reserve
Bank
of
Australia
(RBA)
could
possibly
be
raising
interest
rates
again.
That
said,
speculations
that
Japanese
authorities
will
eventually
intervene
to
prop
up
the
domestic
currency
might
hold
back
traders
from
placing
fresh
bullish
bets
around
the
AUD/JPY
cross.
Market
participants,
however,
now
see
the
165.00
mark
for
the

USD/JPY
pair

as
a
new
line
in
the
sand
for
intervention.
This,
in
turn,
might
do
little
to
inspire
the
JPY
bulls,
which,
along
with
this
week’s
breakout
through
the
108.60
horizontal
resistance,
suggests
that
the
path
of
least
resistance
for
the
AUD/JPY
cross
is
to
the
upside.

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
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.