Key Moments
- AUD/JPY extended its pullback for a second straight session after retreating from the 114.35 area, a near two-week high.
- Softer Australian employment and inflation data have reduced expectations for an RBA rate hike, weighing on the Australian Dollar.
Cross Under Pressure Near Mid-113s
The AUD/JPY pair continued to slide for a second consecutive session on Thursday, building on the prior day’s retreat from the 114.35 region, which had marked a nearly two-week peak. After touching a new weekly low, the cross recovered a few pips and was trading just above the mid-113.00s in early European hours.
RBA Hike Expectations Recede After Soft Data
The Australian Dollar remained comparatively weak as market participants scaled back expectations for additional interest rate increases by the Reserve Bank of Australia. Disappointing Australian labor market figures for April, combined with consumer inflation data that came in below expectations on Wednesday, prompted traders to pare back the likelihood of a rate move at the June RBA meeting. This reassessment has undermined demand for the Aussie and has been a primary driver of the downside pressure on AUD/JPY.
Yen Supported by BoJ Signals and Intervention Speculation
In contrast, the Japanese Yen found support from expectations that the Bank of Japan will maintain a hawkish stance. BoJ Deputy Governor Himino Ryozo stated on Tuesday that the central bank will continue to raise the policy rate based on economic activity, prices, and financial conditions. Alongside this, ongoing speculation that Japanese authorities may step in again to bolster the domestic currency has provided an additional tailwind for the Yen, reinforcing the bearish tone around the AUD/JPY cross.
Risks to Japan’s Outlook Temper Yen Bulls
Despite these supportive factors, upside momentum for the Yen appeared constrained by worries that Japan’s economy could face significant headwinds from sustained disruptions to energy supplies transiting the Strait of Hormuz. These concerns have limited the scope of further losses in AUD/JPY and suggest that traders may prefer to see a more decisive wave of selling before positioning for a renewed extension of the pullback from the 114.70-114.75 band, which marked a multi-decade high earlier this month.
Australian Dollar Performance Against Majors
The following table shows the Australian Dollar’s percentage change today versus major currencies. The Australian Dollar has been strongest relative to the New Zealand Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | — | 0.10% | 0.13% | -0.02% | 0.07% | 0.27% | 0.20% | 0.06% |
| EUR | -0.10% | — | 0.03% | -0.13% | -0.03% | 0.17% | 0.12% | -0.04% |
| GBP | -0.13% | -0.03% | — | -0.15% | -0.07% | 0.14% | 0.09% | -0.09% |
| JPY | 0.02% | 0.13% | 0.15% | — | 0.08% | 0.28% | 0.20% | 0.08% |
| CAD | -0.07% | 0.03% | 0.07% | -0.08% | — | 0.21% | 0.13% | -0.01% |
| AUD | -0.27% | -0.17% | -0.14% | -0.28% | -0.21% | — | -0.06% | -0.22% |
| NZD | -0.20% | -0.12% | -0.09% | -0.20% | -0.13% | 0.06% | — | -0.17% |
| CHF | -0.06% | 0.04% | 0.09% | -0.08% | 0.01% | 0.22% | 0.17% | — |
The heat map above represents the percentage changes of major currencies against one another. The base currency is taken from the left-hand column, and the quote currency is taken from the top row. For instance, selecting the Australian Dollar in the left column and moving across to the US Dollar cell shows the percentage change for AUD (base)/USD (quote).
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