The AUD/JPY currency pair edged down on Friday, as Australian labor data reinforced expectations that the Reserve Bank of Australia might delay any additional policy tightening at its upcoming June meeting.
Australia’s unemployment rate has risen to 4.5% in April, marking its highest level since late 2021.
The unexpected increase has shifted market pricing for RBA policy, as investors now see the data as giving the central bank greater justification to pause rather than proceed with a fourth rate hike this year.
Swaps indicated an 11.7% probability of a rate hike at the RBA’s next meeting in June, signaling that traders are largely discounting further tightening in the near term.
Beyond domestic data, traders were also watching geopolitical developments in the Middle East, particularly prospects for a US-Iran agreement aimed at ending the ongoing war in the region.
Iranian officials stated on Thursday that no agreement had yet been reached with the United States, although they acknowledged that gaps had narrowed during the talks.
Despite progress, uncertainty persists. Iran appears unwilling to relinquish its stockpile of enriched uranium and is seeking recognition of its authority over the Strait of Hormuz, leaving key issues unresolved.
On the Japanese side, recent inflation figures are exerting downward pressure on the Yen. Data by the Japan Statistics Bureau on Friday showed that the National Consumer Price Index had risen 1.4% year-on-year in April, slightly below the 1.5% rate recorded in March.
Japan’s core CPI also increased 1.4% year-on-year in April, which represented the slowest annual rate in four years.
The AUD/JPY currency pair was last down 0.10% on the day to trade at 113.488.
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