- AUD/JPY struggles to gain any meaningful traction and oscillates in a range on Tuesday.
- The RBA left the Official Cash Rate unchanged, though it does little to provide any impetus.
- BoJ rate hike bets and rising trade tensions underpin the JPY, keeping a lid on spot prices.
The AUD/JPY cross struggles to capitalize on the previous day’s modest bounce from the 93.00 neighborhood, or over a two-week low, and oscillates in a range during the Asian session on Tuesday. Spot prices hold steady around the 93.70 region and move little after the Reserve Bank of Australia (RBA) announced its policy decision.
As was widely expected, the Australian central bank announced that it left the Official Cash Rate (OCR) unchanged at 4.1% at the conclusion of the April monetary policy meeting. In the accompanying policy statement, the RBA sounded cautious about the outlook and reiterated that returning inflation sustainably to target remains the highest priority. Furthermore, the central bank said that the continued decline in underlying inflation is welcome and the monetary policy remains restrictive, leaving the door open for a possible rate cut in May.
This, along with persistent worries about US President Donald Trump’s aggressive trade policies and their impact on the global economy, continues to weigh on the Australian Dollar (AUD). Apart from this, the emergence of some dip-buying around the Japanese Yen (JPY), caps the AUD/JPY cross. The Bank of Japan’s (BoJ) Tankan survey released today showed that Japanese enterprises have raised their inflation forecasts for one year, three years, and five years ahead. This backs the case for more BoJ rate hikes and underpins the JPY.
Traders, however, might refrain from placing aggressive directional bets and opt to wait for Trump’s so-called reciprocal tariffs announcement later today, at 19:00 GMT. Nevertheless, the aforementioned fundamental backdrop suggests that the path of least resistance for the AUD/JPY cross is to the downside and any intraday move-up might still be seen as a selling opportunity.
