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- AUD/JPY trades with mild gains around 113.60 in Monday’s early European session.
- Market pricing indicates the OCR could reach 4.7% by the end of 2026, with no cuts expected until 2028.
- Japan’s officials intervened in the FX market during the holidays in early May.
The AUD/JPY cross posts modest gains near 113.60 during the early European trading hours on Monday. The Australian Dollar (AUD) edges higher against the Japanese Yen (JPY) on a hawkish tone from the Reserve Bank of Australia (RBA). Nonetheless, traders remain cautious of potential further interventions from the Japanese authorities.
The Australian central bank raised its Official Cash Rate (OCR) to 4.35% last week, matching its December 2024 peak, as inflation remains elevated. This marks the third consecutive rate hike this year. According to the statement, the RBA said inflation had picked up materially in the second half of 2025, with conflict in the Middle East pushing up fuel and commodity prices.
The RBA signaled that more rate hikes were on the horizon, with its economic forecasts pencilling in a 4.70% policy rate by the end of 2026, with no cuts expected until 2028, according to CNBC.
However, the potential upside for the cross might be limited amid intervention fears. Japanese officials reportedly intervened in the currency market again during the Golden week.
Markets estimated the cost of these additional moves at approximately ¥4 trillion to ¥5 trillion ($32 billion). Japan’s top foreign exchange official, Atsushi Mimura, said last week that continued intervention was possible.
