AUD/JPY rebounds from 2 1/2-week low as Yen pares gains

Having touched a 2 1/2-week low on Monday, the AUD/JPY pair was a notch firmer on Tuesday, as the Yen gave back some of its recent gains against major peers.

Yesterday the Japanese currency advanced on remarks by Bank of Japan Governor Kazuo Ueda that hinted at a possible end to its era of negative interest rates.

In an interview with the Yomiuri newspaper over the weekend, Ueda said that the central bank could obtain sufficient data by the end of the year to determine if it can move away from negative interest rates.

“Ueda’s comments were a little more balanced than you would have thought from the market reaction,” Adam Cole, chief currency strategist at RBC Capital Markets, was quoted as saying by Reuters.

“Japan is still a long way from meeting the criterion of sustainable 2% inflation and the comments don’t really change much for me,” Cole said.

Meanwhile, Japan’s senior ruling party official Hiroshige Seko said earlier on Tuesday that Ueda’s remarks rather meant the Bank of Japan would continue with accommodative policy.

In terms of macro data, Australia’s business confidence was the highest since January in August, but still historically low.

The NAB business confidence index improved to a reading of 2 in August from a revised down 1 in July. Business conditions strengthened last month amid a broad improvement in sales, profitability and employment, data showed.

“With the recent National Accounts release showing GDP growth remained subdued but still positive through Q2, the survey results for August suggest the economy has remained resilient into Q3,” National Australia Bank said in a statement.

As of 9:35 GMT on Tuesday AUD/JPY was inching up 0.09% to trade at 94.321. Yesterday the minor Forex pair went down as low as 93.574. The latter has been the pair’s weakest level since August 25th (93.495).