Key Moments
- AUD/JPY pulled back from around 114.35, a near two-week peak, after weaker Australian CPI data.
- Headline Australian CPI eased to 4.2% YoY in April from 4.6% in March, still above the RBA’s 2%-3% target band.
- Expectations for a potential RBA rate hike in August and ongoing JPY intervention risk are seen limiting AUD/JPY downside.
Australian CPI Surprise Triggers AUD/JPY Pullback
The AUD/JPY cross attracted intraday selling interest after an earlier advance during the Asian session took the pair up to the 114.35 zone, marking a nearly two-week high. In the latest trading, spot levels slipped below 114.00, interrupting a two-day advance. Despite the retreat, the decline appears contained so far.
Pressure on the Australian Dollar followed the release of softer consumer inflation data. According to the Australian Bureau of Statistics (ABS), headline Consumer Price Index (CPI) growth decelerated to 4.2% year-on-year in April from 4.6% in March. Even with the slowdown, inflation remains above the Reserve Bank of Australia’s (RBA) 2% to 3% objective, which keeps the door open for another rate increase at the RBA’s August meeting. This prospect could offer underlying support to the AUD and help cushion AUD/JPY against deeper losses.
JPY Supported by Intervention Concerns, But Upside Is Constrained
The Japanese Yen found some backing from market speculation that Japanese officials may again step in to bolster the currency. This intervention risk provided a counterweight to the earlier AUD strength and contributed to the cross’s move lower.
At the same time, concerns that Japan’s economy could face significant pressure from ongoing disruptions to energy supplies originating from the Middle East may discourage aggressive long-Yen positioning. These worries could temper bullish JPY momentum and, in turn, act as another factor limiting the scale of the AUD/JPY pullback.
Technical Perspective: Pullback Viewed as Potential Buying Opportunity
Given the current macro backdrop, the present correction in AUD/JPY is still being viewed as a possible dip-buying opportunity rather than the start of a sustained downturn. Market participants are monitoring price action around the 114.70-114.75 band, which coincides with a multi-decade high reached earlier this month.
Analysts are looking for a clear bout of strong follow-through selling before concluding that a durable top has been established near that region and before positioning for any more pronounced depreciation in the cross over the near term.
Australian Dollar Performance Versus Major Currencies
The table below details the percentage change in the Australian Dollar against major counterparts today. The Australian Dollar showed its strongest relative performance versus the Canadian Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.03% | -0.02% | 0.00% | 0.00% | 0.10% | -0.07% | -0.05% | |
| EUR | 0.03% | 0.00% | 0.02% | 0.05% | 0.10% | -0.04% | -0.02% | |
| GBP | 0.02% | -0.01% | 0.00% | 0.02% | 0.09% | -0.05% | -0.01% | |
| JPY | 0.00% | -0.02% | 0.00% | 0.02% | 0.10% | -0.04% | -0.01% | |
| CAD | -0.01% | -0.05% | -0.02% | -0.02% | 0.09% | -0.04% | -0.03% | |
| AUD | -0.10% | -0.10% | -0.09% | -0.10% | -0.09% | -0.13% | -0.09% | |
| NZD | 0.07% | 0.04% | 0.05% | 0.04% | 0.04% | 0.13% | 0.02% | |
| CHF | 0.05% | 0.02% | 0.01% | 0.00% | 0.03% | 0.09% | -0.02% |
The heat map shows percentage moves of major currencies against each other, where the base currency is read from the left-hand column and the quote currency from the top row. For instance, selecting the Australian Dollar on the left and the US Dollar along the top yields the percentage change for AUD (base)/USD (quote) in the corresponding cell.
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