The AUD/JPY currency pair was mostly steady on Friday, trading not far from a 2-week high of 114.35, as market participants scaled back expectations of additional interest rate hikes by the Reserve Bank of Australia, while soft Tokyo inflation weighed on the Japanese Yen.
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 RBA’s June meeting.
This reassessment has undermined demand for the Australian Dollar, limiting upside for the AUD/JPY pair.
At the same time, Tokyo’s Consumer Price Index excluding Fresh Food, a gauge closely monitored by the Bank of Japan, rose 1.3% year-on-year, undershooting both expectations and the previous reading of 1.5% YoY.
The measure has now remained below the BoJ’s 2% target for a fourth consecutive month, with fuel and education subsidies helping to counterbalance upward pressure from higher raw material costs linked to the US-Israeli war on Iran.
Against this backdrop, Japan’s Finance Minister Satsuki Katayama warned that authorities could step into the foreign exchange market if needed to curb excessive volatility in the Yen.
The AUD/JPY currency pair was last up 0.03% on the day to trade at 114.05.
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