The AUD/JPY currency pair remained pressured near an 11 1/2-week low of 111.25 on Tuesday, as the Australian Dollar failed to gain traction following the publication of the Reserve Bank of Australia’s June monetary policy meeting minutes.
The RBA’s June minutes indicated that policy makers saw current financial conditions as “somewhat tight”, but emphasized that the board was still prepared to raise interest rates further if needed to safeguard price stability.
The minutes also underscored that the ongoing conflict in the Middle East presented a two-sided risk to the outlook, with significant upside risks to inflation and downside risks to overall economic growth.
At the same time, concerns over a possible foreign-exchange intervention by Japanese authorities remain elevated as the Yen trades near historically sensitive levels.
Japan’s Chief Cabinet Secretary Minoru Kihara reiterated last week that authorities stood ready to respond to excessive moves in the currency market, signaling a willingness to “take appropriate action” if deemed necessary.
The policy stance of the Bank of Japan continues to be a major driver for the Yen. BoJ board member Naoki Tamura, regarded as hawkish, stated last week that the central bank should raise interest rates once every few months and be prepared to accelerate the pace of tightening. He underscored the BoJ’s attention to inflation risks that may arise from the Middle East conflict.
The BoJ’s next monetary policy meeting is scheduled for July 30-31.
The AUD/JPY currency pair was last up 0.07% on the day to trade at 111.57.
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