CFD Trading Rate Australian Dollar vs Japanese Yen (AUDJPY)

• AUD/JPY loses ground as higher Aussie unemployment data bolsters the dovish sentiment surrounding RBA’s policy stance.
• The Aussie Unemployment Rate rose to 4.1%, marking the highest jobless rate since January.
• The lower Japanese GDP in Q1 has weakened the Japanese Yen (JPY) advance.

AUD/JPY snaps its three-day winning streak, trading around 103.00 during the Asian hours on Thursday. The AUD/JPY cross decline is attributed to the mixed employment data from Australia released on Thursday.

The Australian Bureau of Statistics released the seasonally adjusted Employment Change for April, showing an increase of 38.5K to 14.3 million employed people in Australia. This has surpassed the market expectations of a 23.7K reading, reversing from a small drop in March. While the Unemployment Rate rose to 4.1% from the previous reading of 3.9%. This has marked the highest jobless rate since January with the number of unemployed individuals rising by 30.3K to 604.2K.

Additionally, Australia’s 10-year government bond yield traded lower around 4.2%, after Australia’s Wage Price Index (QoQ) showed a 0.8% increase in the first quarter, although, falling slightly below the expected rise of 0.9%. These figures have supported a dovish sentiment surrounding the Reserve Bank of Australia (RBA) regarding monetary policy.

On the Japanese front, the lower-than-expected Japan’s Gross Domestic Product (GDP) in the first quarter has weakened the advance of the Japanese Yen (JPY) and limited the decline of the AUD/JPY cross.

The preliminary Japanese Gross Domestic Product (GDP) contracted 0.5% QoQ in the first quarter, compared to the previous downwardly revised stagnation. The market expectation was a 0.4% contraction. The Annualized GDP fell by 2.0%, surpassing the forecasted decline of 1.5%. The previous reading was downwardly revised to no growth at 0%.

Japan's Economy Minister, Minister Shindo, has indicated that the economy is anticipated to sustain a moderate recovery. However, Shindo emphasized the necessity to closely monitor risks associated with foreign exchange fluctuations, which could potentially drive up domestic prices.

• AUD/JPY extends its gains due to improved risk appetite on Wednesday.
• The Australian government aims to address headline inflation and alleviate cost-of-living pressures by allocating billions in funding.
• Japan’s Finance Minister Shunichi Suzuki will coordinate with the BoJ regarding the FX market to take possible measures if necessary.

AUD/JPY continues its winning streak, hovering around 103.70 during the European session on Wednesday due to the improved risk appetite. The Australian Budget for 2024-25 has returned to a deficit after recording a surplus of $9.3 billion in 2023-24. The Australian government aims to tackle headline inflation and alleviate the cost of living pressures by allocating billions to reduce energy bills and rent, alongside initiatives to lower income taxes.

On Wednesday, the Australian Bureau of Statistics released the Wage Price Index (Q1), an indicator of labor cost inflation. The index showed a 0.8% increase in the first quarter, falling slightly below the anticipated rise of 0.9%. On a year-over-year basis, it saw a 4.1% increase, also slightly lower than the expected 4.2% rise.

On the JPY front, Japan’s Finance Minister Shunichi Suzuki stated on Tuesday that the government is collaborating with the Bank of Japan to ensure alignment in policy objectives regarding foreign exchange. He further noted that they are implementing all feasible measures to closely monitor movements in the Japanese Yen.

Japan's 10-year government bond yield remains steady at around 0.95%, marking its highest level in over six months. This comes as the Bank of Japan (BoJ) reduced the amount of Japanese government bonds it would purchase this week, marking the first such move since lifting its negative interest rate policy in March.

The interest rate differential between Japan and other major economies has encouraged investors to borrow the Japanese Yen (JPY) and invest in higher-yielding currencies, leading to a depreciation of the JPY.

• AUD/JPY gains ground as RBA is expected to maintain higher rates for an extended period.
• The fear of Japan’s intervention could limit the advance of the pair.
• Australian Retail Sales (Q1) declined 0.4% in Q1, swinging from the previous quarter’s 0.4% growth.

AUD/JPY continues its winning streak that began on May 2, trading around 102.50 during the European session on Thursday. However, the fear of intervention from the Japanese authorities is expected to cap the AUD/JPY cross's upward movement.

Japan's 10-year government bond yield has surged to around 0.9%, approaching six-month highs in response to the summary of the Bank of Japan's (BoJ) April policy meeting. During the meeting, the board acknowledged upside risks to inflation and deliberated scenarios that could necessitate further interest rate hikes. This statement underscored BoJ Governor Kazuo Ueda's recent remarks hinting at the possibility of multiple rate increases in the upcoming months.

On the AUD front, Australian Retail Sales (QoQ), which measures the volume of goods sold by retailers in Australia, saw a decline of 0.4% in the first quarter of 2024. This represents a reversal from the 0.4% growth observed in the fourth quarter of 2023.

The Australian Dollar (AUD) may encounter challenges due to the Reserve Bank of Australia (RBA)'s less hawkish stance, particularly following the Monthly Consumer Price Index (YoY) for March, which surged to 3.5%, surpassing the expected reading of 3.4%.

The RBA acknowledged a recent halt in progress toward controlling inflation, maintaining a stance of keeping options open. RBA Governor Michele Bullock emphasized the importance of remaining vigilant regarding inflation risks. Bullock believes that current interest rates are suitably positioned to guide inflation back within its target range of 2-3% by the second half of 2025 and to the midpoint by 2026.

• AUD/JPY up 0.30%, showing bullish momentum for potential rise beyond 102.35.
• Bullish RSI indicates room for growth before hitting overbought conditions.
• Key levels: Resistance at Tenkan-Sen (102.42) and support at Kijun-Sen (101.36).

The AUD/JPY extends its gains for the fifth day in a row, climbs 0.30%, and trades at 102.35. Market sentiment remains upbeat, which usually weighs on the Japanese Yen (JPY) safe-haven appeal, which remains the laggard in the Forex markets against other peers.

AUD/JPY Price Analysis: Technical outlook

After reaching a year-to-date (YTD) high at 104.95, the AUD/JPY retreated towards 100.00, following a confirmed intervention by the Bank of Japan (BoJ). Since then, the pair has extended its gains, though it faces solid resistance at the Tenkan-Sen at 102.42.

Momentum favors buyers, with the Relative Strength Index (RSI) standing at bullish territory, aiming upwards with enough room before hitting overbought territory.

If AUD/JPY buyers want to re-test the YTD high, they must clear the Tenkan-Sen. Once surpassed, the 103.00 figure would emerge as the next stop, ahead of testing April’s 26 high at 103.47. Up next would be 104.00, followed by the YTD high.

On the other hand, buyers' failure to crack the Tenkan-Sen can pave the way for sellers to step in and push prices lower. The first support would be the 102.00 mark, followed by the Kijun-Sen at 101.36. Further losses are seen at the May 3 low at 100.45, followed by the 100.00 figure.

AUD/JPY Price Action – Daily Chart

• AUD/JPY could continue its winning streak due to improved risk appetite.
• The Australian Dollar depreciated due to the less hawkish RBA despite higher inflation in March.
• The Japanese Yen struggles despite the potential for intervention by Japanese authorities.

AUD/JPY hovers around 102.00 during the European session on Wednesday. The Australian Dollar (AUD) declined following the Reserve Bank of Australia (RBA)'s decision to keep its interest rate at 4.35% on Tuesday, which added pressure on the AUD/JPY cross. Investor sentiment tilted towards a potentially more hawkish stance from the RBA, especially after March's unexpected surge in Australian monthly inflation, contrasting with market forecasts of stagnation.

Furthermore, RBA Governor Michele Bullock underscored the importance of remaining vigilant regarding inflation risks. Bullock expressed confidence that current interest rates are appropriately positioned to guide inflation back into the target range of 2-3% in the latter half of 2025 and toward the midpoint by 2026. Nonetheless, the RBA acknowledged a recent halt in progress toward curbing inflation, maintaining its forward guidance of "not ruling anything in or out."

The Japanese Yen (JPY) experienced appreciation last week amidst speculation surrounding potential intervention by Japanese authorities. According to Reuters, data from the Bank of Japan (BoJ) indicated that Japanese authorities may have allocated approximately ¥6.0 trillion on April 29 and ¥3.66 trillion on May 1 to bolster the JPY. However, these interventions were only able to offer temporary relief, given the substantial interest rate differentials between Japan and the United States (US).

The Japanese Yen faces challenges despite prevalent warnings from Japanese authorities regarding extreme currency fluctuations. Finance Minister Shunich Suzuki reiterated the caution that authorities stand ready to address excessive foreign exchange volatility. While the Bank of Japan (BoJ) Governor Kazuo Ueda highlighted the need to evaluate the impact of Yen movements on inflation to guide policy decisions.

• AUD/JPY struggled after the RBA decided to keep the policy rate unchanged at 4.35% on Tuesday.
• Analysts from Commonwealth Bank and Westpac forecast that the RBA's interest rate could have reached its peak at 4.35% in November 2023.
• The safe-haven JPY faced challenges due to the prevalent risk appetite.

AUD/JPY trades around 102.20 during the Asian trading hours on Tuesday. The Australian Dollar (AUD) faced a challenge after the Reserve Bank of Australia's decision to keep interest rates steady at 4.35%, as anticipated during Tuesday's meeting. This decision is likely influenced by the recent Australian inflation data surpassing expectations last week.

Australia experienced a decline in inflation during the first quarter, marking the fifth consecutive quarter of deceleration, despite surpassing initial forecasts. Furthermore, the country's monthly CPI indicator surged in March, contrary to market expectations of stagnation.

Analysts at Commonwealth Bank and Westpac predict that the RBA's interest rate might have peaked at 4.35% in November 2023, before gradually declining to 3.10% by December 2025.

Meanwhile, the risk-on sentiment persists, exerting pressure on safe-haven currencies such as the Japanese Yen (JPY). Masato Kanda, Japan's top currency diplomat, hinted at possible measures to address excessive market fluctuations earlier on Tuesday.

Last week, the Japanese Yen (JPY) saw appreciation amidst speculation of government intervention by Japanese authorities. Reuters reported data from the Bank of Japan (BoJ) suggesting that Japanese authorities might have allocated around ¥6.0 trillion on April 29 and ¥3.66 trillion on May 1 to bolster the JPY.

• AUD/JPY up 0.87%, nearing 102.00 due to optimistic global financial outlook.
• Technicals: Upward momentum with RSI above 50 indicates bullish control.
• Resistances at 102.42 (Tenkan-Sen), 102.84 (2014 high), and 103.47 (April 26 high).

The AUD/JPY climbed 0.87% on Monday amid an upbeat market mood, sponsored by increased odds the US Federal Reserve might cut rates sooner than expected. The cross-pair trades at 101.94, shy of the 102.00 figure, as the Asian session begins.

AUD/JPY Price Analysis: Technical outlook

The AUD/JPY is neutral to upward biased, with momentum suggesting that buyers are in charge, with the Relative Strength Index (RSI) indicator standing above the 50-midline. If AUD/JPY buyers would like to extend their gains, they must reclaim 102.00. Once cleared, the next supply zone would be the Tenkan-Sen at 102.42. Once cleared, further gains lie, up at the 2014 yearly high of 102.84, ahead of the April 26 high of 103.47.

On the other hand, if bears drag prices below the Kijun-Sen at 101.36, that will pave the way for testing the Senkou Span B at 100.92. Further losses are seen at the May 1 low of 99.89.

AUD/JPY Price Action – Daily Chart

• AUD/JPY gains ground due to hawkish sentiment surrounding the RBA.
• RBA is expected to maintain the cash rate at a 12-year high of 4.35% on Tuesday.
• Japanese markets are closed on Monday due to a national holiday, with the potential for intervention by Japanese authorities.

AUD/JPY continues to gain ground, trading around 101.90 during the European trading hours on Monday, buoyed by a hawkish sentiment surrounding the Reserve Bank of Australia (RBA). This investor sentiment bolsters the strength of the Aussie Dollar, providing support to the AUD/JPY cross.

The Australian central bank is widely expected to maintain the cash rate at a 12-year high of 4.35% in its upcoming Tuesday meeting. However, there are anticipations that it might reintroduce a soft tightening bias, especially following last week's inflation data, which surpassed expectations, as reported by The Australian Financial Review.

Australia's inflation declined in the first quarter, marking the fifth consecutive quarter of slowing, although it exceeded forecasts. Additionally, the country's monthly CPI indicator accelerated in March, contrary to market expectations of no change.

On Monday, the Japanese market is closed due to a national holiday, with intervention risks lingering. Last week, the Japanese Yen (JPY) appreciated amidst potential government intervention by Japanese authorities. Reuters reported that data from the Bank of Japan (BoJ) indicated that Japanese authorities may have allocated approximately ¥6.0 trillion on April 29 and ¥3.66 trillion on May 1 to reinforce the JPY.

The perceived market intervention by Japanese authorities provided only temporary relief, as the underlying market fundamentals continue to weigh bearishly on the Japanese Yen. Throughout this year, the JPY has faced pressure due to the Bank of Japan maintaining ultra-low interest rates despite elevated borrowing costs abroad. Consequently, traders have been incentivized to borrow the domestic currency and invest in higher-yielding foreign currencies.

• AUD/JPY depreciated as JPY continued to gain ground amid possible market intervention by Japanese authorities.
• Japan's vice finance minister for international affairs, Masato Kanda declined to comment on whether Japan had intervened in the market.
• Australian Composite PMI declined in April, indicating a slower pace of growth in private sector output.

AUD/JPY declined as the Japanese Yen (JPY) strengthened on Friday, following a rally on Thursday attributed to potential Japanese government intervention, marking the second such incident this week, according to a Reuters report. Masato Kanda, Japan's vice finance minister for international affairs, declined to comment on whether Japan had intervened in the market. It is worth noting that Japanese banks will be closed due to Greenery Day on Friday.

On Thursday, the Bank of Japan (BoJ) released Minutes from the March meeting with insights into the monetary policy outlook. One member noted that the economy's reaction to a short-term rate increase to approximately 0.1% is expected to be minimal. Additionally, several members expressed the opinion that market forces should primarily determine long-term rates.

The Australian Dollar (AUD) may strengthen due to the hawkish sentiment surrounding the Reserve Bank of Australia (RBA). It is widely anticipated that the RBA will maintain its key policy rate at 4.35% for a fourth consecutive meeting on Tuesday, and likely until the end of September, according to a Reuters poll of economists. These economists forecast only one interest rate cut this year. This shift in expectations, from two 25 basis point cuts in an April survey, follows news that inflation declined less than expected in the last quarter and the labor market remains tight.

Daily Digest Market Movers: AUD/JPY depreciates after softer Aussie PMI data

• The Judo Bank Australia Composite Purchasing Managers Index (PMI) fell to 53.0 in April from 53.3 prior. The Australian private sector output grew slightly slower. Business activity growth was primarily limited to the service sector, as manufacturing output continued to decline. The Services PMI fell to 53.6 from 54.4 in the previous month.
• The ASX 200 Index advanced on Friday, marking its second consecutive session of gains. The rise followed positive movements on Wall Street overnight, driven by reassurances from the US Federal Reserve that dismissed concerns about another interest rate hike.
• On Thursday, Australia’s Trade Balance (MoM) showed a surplus but lower than the market expectations in April. Additionally, the Building Permits showed the number of permits for new construction projects rose but fell short of the expectations in March.
• The Consumer Confidence Index fell to 38.3 in April from 39.5 in March and came below the market expectations of 39.7. This decline marks the lowest level in three months, reflecting weakened sentiment among households.
• According to Reuters, the Sankei newspaper reported on Tuesday that Japan is considering implementing tax breaks for repatriation of corporate profits into the Yen. This measure may potentially be included in the annual mid-year policy blueprint.

Technical Analysis: AUD/JPY falls to near 100.50 aligned with channel’s lower boundary

The AUD/JPY trades around 100.50 on Friday, testing to break below the lower boundary of the ascending channel. However, the 14-day Relative Strength Index (RSI) is positioned above the 50 level. A further decline could commence the weakening of the bullish bias.

A break below the lower boundary of the ascending channel could lead the AUD/JPY cross to navigate the region around the psychological level of 100.00. A further decline could strengthen the bearish bias and put pressure on the currency cross to reach April’s low at 97.78.

The key resistance is observed at the lower boundary of the wedge around the psychological level of 103.80. A rebound back into the ascending wedge could potentially strengthen the bullish bias and push the AUD/JPY cross toward the psychological level of 105.00, followed by the upper boundary of the wedge.

AUD/JPY: Daily Chart

• AUD/JPY rebounded due to possible positive sentiment in the market after the Fed decided to maintain the current interest rate.
• The Japanese Yen experienced an increase during the morning hours in New Zealand driven by another possible government intervention.
• Australian Bureau of Statistics reported a Trade Balance (MoM) with a surplus lower than expected in April.

AUD/JPY edges higher on Thursday after paring daily losses. The Japanese Yen (JPY) saw an uptick during the morning in New Zealand driven by another possible government intervention, marking the second occurrence this week. However, it later relinquished its gains following the release of the Bank of Japan (BoJ) Board members' insights into the monetary policy outlook during Thursday's session, as documented in the BoJ Minutes from the March meeting.

According to Reuters, a member mentioned that the economy's response to a short-term rate increase to approximately 0.1% is expected to be minimal. Several members expressed the belief that long-term rates ought to be primarily determined by market forces. Additionally, a few members suggested that the Bank of Japan should eventually consider decreasing its bond purchasing and scaling down its bond holdings.

The Australian Dollar (AUD) receives support, potentially buoyed by the prevailing positive sentiment in the market following the US Federal Reserve's decision to maintain interest rates at 5.25%-5.50% during Wednesday's policy meeting. Furthermore, Fed Chair Jerome Powell dismissed the likelihood of a further rate hike, contributing to the positive outlook. Nevertheless, the anticipation of interest rate hikes in Australia later this year remains on the table.

Australia’s Trade Balance and Building Permits data showed weaker-than-expected readings, which could contribute to downward pressure on the Australian Dollar. These disappointing readings could dampen the hawkish sentiment surrounding the Reserve Bank of Australia's (RBA)'s stance on maintaining higher interest rates throughout 2024.

Daily Digest Market Movers: AUD/JPY gains ground due to positive market sentiment

• Australia’s Trade Balance (MoM) showed a surplus of 5,024 million in April. The market was expecting an increase to 7,370 million from the previous 7,370 million.
• The Building Permits released by the Australian Bureau of Statistics shows the number of permits for new construction projects rose by 1.9%, falling short of the expected 3.0% in March. The previous month’s reading was -1.9%.
• On Thursday, the ASX 200 Index saw a modest increase following the uptick were heavyweight financial firms. This benchmark index recovers some of the losses from the previous session, following the Federal Reserve's decision to maintain interest rates.
• On Wednesday, the AiG Australian Industry Index declined in April indicating prevailing contractionary conditions for the past twenty-four months. Additionally, the seasonally adjusted Australian Retail Sales released on Tuesday showed a drop in March, compared to the expected increase and the previous growth.
• As reported by the Financial Review, ANZ anticipates that the RBA will commence cutting interest rates in November, following last week’s stronger-than-expected inflation data. In a similar vein, Australia's largest mortgage lender, Commonwealth Bank, has adjusted its forecast for the timing of the first interest rate cut by the RBA. They are now projecting only one cut in November.
• Masato Kanda, Japan's top currency diplomat, refrained from confirming whether Japanese authorities had indeed intervened early Thursday in response to a significant strengthening of the JPY. Kanda mentioned that intervention data will be disclosed at the end of the month.
• Japan’s Retail Trade increased by 1.2% year-over-year in March, which was lower than the expected increase of 2.5% and the previous increase of 4.7%. The seasonally adjusted Retail Trade (MoM) decreased by 1.2%, against the expected rise of 0.6%.
• According to Reuters, the Sankei newspaper reported on Tuesday that Japan is considering implementing tax breaks for repatriation of corporate profits into the Yen. This measure may potentially be included in the annual mid-year policy blueprint.

Technical Analysis: AUD/JPY rises to near the psychological level of 102.00

The AUD/JPY traded around 102.00 on Thursday, remaining below the lower boundary of a rising wedge pattern on the daily chart. Traders may await clear direction from the 14-day Relative Strength Index (RSI), which is still above the 50-level.

The key support for the AUD/JPY pair is seen at the lower boundary of the ascending channel around the psychological level of 100.00. A break below this level could strengthen the bearish bias and put pressure on the currency cross to navigate the region around April’s low at 97.78.

Immediate resistance is observed at the lower boundary of the wedge around the psychological level of 103.00. A rebound back into the ascending wedge could potentially improve the bullish bias and push the AUD/JPY pair toward the psychological level of 105.00, followed by the upper boundary of the wedge.

AUD/JPY: Daily Chart

• The Australian Dollar loses ground after the release of the weaker AiG Industry Index on Wednesday.
• The Australian Industry Index indicated prevailing contractionary conditions for the past twenty-four months.
• Traders will monitor for any potential Japanese intervention, following recent reports suggesting Tokyo's involvement in the currency market.

AUD/JPY extends its losing streak for the third consecutive session. The Australian Dollar (AUD) faced pressure following the release of the AiG Industry Index on Wednesday, a leading indicator measuring private business activity in Australia, which continued its decline in March.

The softer Aussie Retail Sales released on Tuesday could potentially impact the Reserve Bank of Australia's (RBA) hawkish stance on interest rate trajectory. However, higher-than-expected domestic inflation data released last week raised expectations that the RBA may delay interest rate cuts. The central bank is scheduled to meet next week, and it is widely anticipated to maintain interest rates at the current level of 4.35%

In Japan, market participants are closely monitoring for potential intervention following reports of Tokyo's involvement in the currency market on Monday, which boosted the Japanese Yen (JPY), according to Reuters. Additionally, expectations for a sustained significant interest rate differential between Japan and other nations suggest that the trajectory of the JPY is biased toward further depreciation.

The Bank of Japan (BoJ) is set to release its Monetary Policy Meeting Minutes on Thursday. These minutes provide insight into economic developments in Japan following the actual meeting. Changes in this report can influence JPY volatility.

Daily Digest Market Movers: AUD/JPY edges lower after weaker Aussie data

• In April, the AiG Australian Industry Index declined by 3.6 points to reach -8.9 points, indicating prevailing contractionary conditions for the past twenty-four months. The previous reading was -5.3 in March.
• The benchmark ASX 200 opened lower on Wednesday, with all 11 sectors in the red. This decline followed hot US labor data that unsettled Wall Street, sparking concerns that persistent inflation may prompt the US Federal Reserve (Fed) to maintain higher interest rates for an extended period.
• As reported by the Financial Review, ANZ anticipates that the RBA will commence cutting interest rates in November, following last week’s stronger-than-expected inflation data. In a similar vein, Australia's largest mortgage lender, Commonwealth Bank, has adjusted its forecast for the timing of the first interest rate cut by the RBA. They are now projecting only one cut in November.
• The seasonally adjusted Australian Retail Sales released on Tuesday, showed a drop in March, compared to the expected increase and the previous growth.
• Japan’s Retail Trade increased by 1.2% year-over-year in March, which was lower than the expected increase of 2.5% and the previous increase of 4.7%. The seasonally adjusted Retail Trade (MoM) decreased by 1.2%, against the expected rise of 0.6%.
• Masato Kanda, Japan's senior currency diplomat, made pointed comments regarding the currency's impact on import prices, emphasizing its significant influence. He highlighted the readiness of authorities to take action around the clock to address currency-related matters, as per a Reuters report.
• BoJ Governor Kazuo Ueda provided insights into the central bank's decision to maintain the status quo during the post-policy meeting press conference on Friday. Ueda outlined that the BoJ will adjust the degree of monetary easing if the underlying inflation rate rises.

Technical Analysis: AUD/JPY hovers around the psychological level of 102.00

The AUD/JPY trades around 102.10 on Wednesday, breaking below the lower boundary of a rising wedge pattern on the daily chart, which typically indicates a bearish reversal. This decline could weaken bullish sentiment; however, traders may await confirmation from the 14-day Relative Strength Index (RSI), which is still above the 50-level.

Immediate resistance is observed at the lower boundary of the wedge around the psychological level of 103.00. A rebound back into the ascending wedge could potentially improve the bullish sentiment and push the AUD/JPY pair toward the psychological level of 105.00, coinciding with the upper boundary of the wedge.

On the downside, immediate support for the AUD/JPY pair is seen at the psychological level of 102.00, followed by the nine-day Exponential Moving Average (EMA) at 101.56.

AUD/JPY: Daily Chart

• AUD/JPY declines 0.77% amid reactions to recent Bank of Japan interventions.
• Key support levels are at 101.35 and the April 25 low of 100.77, ahead of 100.00.
• Should the pair climb above 102.00, it might aim to retest resistance at 102.84 and potentially push towards the year-to-date high of 104.95.

The Aussie Dollar extends its losses against the Japanese Yen for the second straight day, following an intervention by the Bank of Japan (BoJ) on Monday, which kept the pair seesawing in the 101.37/104.95 range. Late in the North American session, the AUD/JPY trades at 102.18, down 0.77%.

AUD/JPY Price Analysis: Technical outlook

The AUD/JPY daily chart suggests the pair is upward biased despite retreating below the 103.00 figure. Subsequent losses are seen below the Tenkan and Kijun-Sen levels at 101.35, followed by the April 25 low at 100.77. A breach of the latter will expose the 100.00 threshold, followed by the April 22 low at 99.05.

On the other hand, the uptrend might resume if buyers hold the AUD/JPY exchange rate above 102.00. The first resistance would be the 2014 high at 102.84, followed by the 103.00 mark. Once cleared, the next stop would be the year-to-date (YTD) high at 104.95.

AUD/JPY Price Action – Daily Chart

• The Australian Dollar loses ground after the release of lower-than-expected Retail Sales.
• The Australian Retail Sales for March took an unexpected downturn, contrasting with the anticipated rise.
• Market participants will closely monitor for any potential Japanese intervention on Tuesday.

AUD/JPY edges lower on Monday after the release of the lower-than-expected Aussie Retail Sales, a leading indicator that has a direct correlation with inflation and growth prospects, could impact the RBA’s hawkish stance on interest rate trajectory. However, the Australian Dollar (AUD) strengthened as higher-than-expected domestic inflation data raised expectations that the Reserve Bank of Australia (RBA) may not cut interest rates soon.

Australia's largest mortgage lender, Commonwealth Bank has adjusted its forecast for the timing of the first interest rate cut by the RBA. They are now projecting only one cut in November, as reported by the Financial Review. CBA anticipates that the Reserve Bank of Australia' could decrease the cash rate to 4.1% from 4.35% this year, with a more substantial drop to 3.1% by 2025. Gareth Aird, CBA's head of Australian economics, stated, "We have penciled in one 25 basis point rate cut in each quarter over 2025."

On the Japanese side, market participants will remain vigilant for potential Japanese intervention on Tuesday, following reports of Tokyo's involvement in the currency market on Monday, which propelled the Japanese Yen (JPY), according to Reuters. Lower-than-expected domestic Retail Trade data released on Tuesday support the dovish stance of the Bank of Japan (BOJ). Additionally, expectations for a sustained significant interest rate differential between Japan and other nations suggest that the trajectory of the JPY is biased toward further depreciation.

Daily Digest Market Movers: AUD/JPY edges lower after softer Retail Sales

• The seasonally adjusted Australian Retail Sales dropped 0.4% MoM in March, compared to the expected increase of 0.2% and the previous growth of 0.3%.
• China’s NBS Manufacturing Purchasing Managers Index (PMI) fell to 50.4 in April, against the 50.8 prior. The reading was better than the expected reading of 50.3. Non-manufacturing PMI declined to 51.2, as expected. The previous reading was 53.0 in March.
• Japan’s Retail Trade increased by 1.2% year-over-year in March, which was lower than the expected increase of 2.5% and the previous increase of 4.7%. The seasonally adjusted Retail Trade (MoM) decreased by 1.2%, against the expected rise of 0.6%.
• Australian shares kicked off Tuesday with little change, as investors paused ahead of the upcoming US Federal Reserve rates decision on Wednesday. Among the 11 sectors, only materials showed gains, while the rest remained relatively unchanged.
• Masato Kanda, Japan's senior currency diplomat, made pointed comments regarding the currency's impact on import prices, emphasizing its significant influence. He highlighted the readiness of authorities to take action around the clock to address currency-related matters, as per a Reuters report.
• BoJ Governor Kazuo Ueda provided insights into the central bank's decision to maintain the status quo during the post-policy meeting press conference on Friday. Ueda outlined that the BoJ will adjust the degree of monetary easing if the underlying inflation rate rises. Additionally, He emphasized that easy financial conditions will be maintained for the time being, indicating the BoJ's commitment to supporting economic recovery and stability through accommodative monetary measures.

Technical Analysis: AUD/JPY maintains position above 102.00

The AUD/JPY traded around 102.70 on Tuesday, hovering above the lower boundary of the ascending triangle on a daily chart. Additionally, the 14-day Relative Strength Index (RSI) is above the 50-level, reinforcing the bullish sentiment.

The immediate resistance is observed at the psychological level of 105.00, coinciding with the upper boundary of the triangle. A breakthrough above this area could propel the AUD/JPY cross to test the highest level of 105.43 recorded in April 2013.

On the downside, immediate support for the AUD/JPY pair might be encountered at the psychological level of 102.00, aligning with the lower boundary of the triangle. If the pair breaches below this level, it could lead to a further decline toward the nine-day Exponential Moving Average (EMA) at 101.51.

AUD/JPY: Daily Chart

• The daily RSI suggests consistent buying momentum, with a slight dip indicating the possibility of a short-term correction.
• The hourly RSI and MACD readings suggest mounting selling pressure in recent transactions.

The AUD/JPY trades at 102.43, demonstrating a pronounced bullish inclination despite Monday’s sharp losses. Indicators took a big hit and suggests that despite the bullish command, sellers are gaining ground.

On the daily chart, the Relative Strength Index (RSI) is seen trending within the overbought terrain, suggesting that buying activity has dominated the market action. A recent dip from overbought territory to 66 indicates potential for a short-term correction in the upcoming sessions. Meanwhile, the Moving Average Convergence Divergence (MACD) maintains flat green bars, signifying stable positive momentum.

AUD/JPY daily chart

Shifting to the hourly chart, the RSI readings reveal a contrasting scenario. The hourly RSI readings are trending in the negative territory, demonstrating that selling activity had a certain control in the latest trading hours. Moreover, the hourly MACD marks flat red bars, underlining a steady negative momentum.

AUD/JPY hourly chart

Observing the broader perspective, the AUD/JPY currently occupies a position above the 20, 100, and 200-day SMA. This stance underscores the prevailing bullish market sentiment in both short-term and long-term scenarios. In conclusion, while the daily indicators reflect an overall bullish sentiment, recent hourly readings suggest the potential for a short-term correction. Traders should monitor these contrasting signals closely as there might be a shift in the momentum in favor of the sellers and they might reclaim the 20-day SMA.

• The Australian Dollar surges driven by growing hawkish sentiment surrounding RBA, following the hot CPI data.
• Judo Bank chief economic adviser Warren Hogan predicts that the RBA might increase the cash rate three times in 2024.
• The safe-haven JPY loses ground due to the uncertainty surrounding the BoJ's rate outlook.

AUD/JPY continues its winning streak for the sixth successive session on Monday, hovering around 104.50, a level not seen since April 2013. The persistent upward momentum of the AUD/JPY pair is driven by the increasing hawkish sentiment surrounding the Reserve Bank of Australia (RBA), following the release of last week's Consumer Price Index (CPI) inflation data.

The unexpected surge in inflation figures prompted economists to revise their earlier forecasts significantly. Warren Hogan, chief economic adviser at Judo Bank, told “The Australian Financial Review” his anticipation of the central bank raising the cash rate three times this year, reaching 5.1%, with the first hike likely in August. Investors now look forward to Retail Sales for March on Tuesday, which gauges Australia’s consumer spending. It has a significant bearing on Australia’s inflation and GDP.

The Japanese Yen (JPY) tumbled to new multi-decade lows following the Bank of Japan's (BoJ) decision to maintain policy settings unchanged on Friday. Uncertainty surrounding the BoJ's rate outlook, indications of cooling inflation in Japan, and a generally optimistic sentiment in equity markets are pivotal factors eroding the safe-haven appeal of the JPY.

Furthermore, expectations for a prolonged wide interest rate differential between Japan and the other countries imply that the JPY's trajectory is biased towards further decline. With Japanese markets closed on Monday for Showa Day, market dynamics may see limited shifts in the absence of trading activity.

Daily Digest Market Movers: AUD/JPY rises on increasing hawkish sentiment surrounding RBA

• Australia's stock market experienced a robust rally on Monday, inspired by a strong performance on Wall Street. The ASX 200 Index recovered some ground lost on Friday, with all 11 industry sectors trading in positive territory. Friday's rally on Wall Street was fueled by impressive earnings reports from tech giants such as Microsoft and Google's parent company, Alphabet, propelling the Nasdaq up by more than 2%
• On Friday, TD Securities' revision suggests a postponement of the anticipated rate cut by the Reserve Bank of Australia (RBA) until February 2025, shifting from the previously anticipated date in November. This development strengthens the Australian Dollar (AUD) and, in turn, bolsters the AUD/JPY pair.
• BoJ Governor Kazuo Ueda provided insights into the central bank's decision to maintain the status quo during the post-policy meeting press conference on Friday. Ueda outlined that the BoJ will adjust the degree of monetary easing if the underlying inflation rate rises. Additionally, He emphasized that easy financial conditions will be maintained for the time being, indicating the BoJ's commitment to supporting economic recovery and stability through accommodative monetary measures.
• Tokyo Consumer Price Index rose 1.8% YoY in April, well below the previous print of 2.6%. Markets were broadly expecting Tokyo inflation to hold steady over the period. The Core CPI fell sharply to 1.6% year-on-year, marking its lowest level since March 2022 and falling well below forecasts of 2.2%.
• On Friday, a report from Reuters said that the Bank of Japan (BOJ) is expected to project that inflation will remain close to its 2% target in the coming years and signal its preparedness to raise interest rates from their near-zero levels. This stance by the BOJ is aimed at preventing Yen depreciation and discouraging market participants from pushing the currency to fresh 34-year lows.
• Australia’s Consumer Price Index (CPI) increased to an all-time high of 137.40 points in the first quarter of 2024 from 136.10 points in the fourth quarter of 2023.
• As reported by the Japan Times, the percentage of Japanese companies aiming to raise their pay scales has surged to 70.7%, representing a notable increase of 6.3 percentage points compared to the prior year. Furthermore, the number of companies intending to implement pay-scale hikes and regular pay increases totaling 5% or higher has nearly doubled from the previous year, reaching 36.5%. This trend holds the potential to enhance the purchasing power of individuals, potentially leading to an uptick in consumer prices.

Technical Analysis: AUD/JPY surges to the major level of 104.50

The AUD/JPY trades around 104.50 on Monday, surpassing the upper boundary of the daily ascending channel. Additionally, the 14-day Relative Strength Index (RSI) is trending above the 50-level, strengthening the bullish sentiment. The immediate resistance is seen at the psychological level of 105.00. A breakthrough above this level could support the cross to test the highest level of 105.43 recorded in April 2013.

On the downside, immediate support for the AUD/JPY pair could be found at the psychological level of 104.00. If the pair breaches below this level, the AUD/JPY cross could lead to a further decline toward the nine-day Exponential Moving Average (EMA) at 101.59, aligned with the lower boundary of the ascending channel and a major level of 101.50.

AUD/JPY: Daily Chart

• AUD/JPY extends its winning streak after the lower-than-expected Tokyo CPI data released on Friday.
• The Australian 10-year Government Bond Yield has reached a 21-week high of 4.59%.
• Tokyo CPI has fallen below the Bank of Japan's (BoJ) 2% target for the second time this year.

AUD/JPY extends its winning streak for the fifth consecutive session on Friday. The Australian Dollar (AUD) finds support from increasing bids for a hawkish stance for the Reserve Bank of Australia’s (RBA) monetary policy. The revision by TD Securities indicates a delay in the expected rate cut by the Reserve Bank of Australia (RBA) until February 2025 instead of November. This boosts the Australian Dollar (AUD) and consequently supports the AUD/JPY cross.

Australia’s Consumer Price Index (CPI) data on Wednesday, surpassing expectations, is also playing a role in an increase in Australian government bond yields as traders price out expectations regarding interest rate cuts by the RBA in 2024. The Australian 10-year Government Bond Yield has reached a 21-week high of 4.59%, indicating a significant upward trend.

The Japanese Yen (JPY) depreciated following the release of Japan's Tokyo Consumer Price Index (CPI), which came in well below expectations early Friday. This print marks the second time this year that inflation has fallen below the Bank of Japan's (BoJ) 2% target, reducing pressure on the central bank to raise interest rates again. As a result, market sentiment is shifting towards the expectation that the BoJ will abstain from implementing rate hikes during its meeting on Friday.

Daily Digest Market Movers: AUD/JPY gains ground after weaker Tokyo’s CPI data

• Tokyo Consumer Price Index rose 1.8% YoY in April, well below the previous print of 2.6%. Markets were broadly expecting Tokyo inflation to hold steady over the period. The Core CPI fell sharply to 1.6% year-on-year, marking its lowest level since March 2022 and falling well below forecasts of 2.2%.
• SocGen's assessment of the potential for USD/JPY to test the Japanese Ministry of Finance's intervention limits due to persistent US rate expectations and recent market dynamics suggests a significant focus on the interplay between US economic data and currency movements.
• On Friday, a report from Reuters said that the Bank of Japan (BOJ) is expected to project that inflation will remain close to its 2% target in the coming years and signal its preparedness to raise interest rates from their near-zero levels. This stance by the BOJ is aimed at preventing yen depreciation and discouraging market participants from pushing the currency to fresh 34-year lows.
• Jiji news agency reported on Thursday that the Bank of Japan (BOJ) might reduce its bond purchases appears to be exerting a more significant influence on the market sentiment compared to the lower-than-expected Tokyo Consumer Price Index (CPI) data released today.
• According to Luci Ellis, Westpac's chief economist and former Assistant Governor (Economic) at the Reserve Bank of Australia, inflation slightly surpassed expectations in the March quarter. They anticipate the Board will maintain interest rates in May and have revised the projected date for the initial rate reduction from September to November this year.
• According to analysts at Barrenjoey Capital Partners, a leading Australian investment banking firm, advised to utilize the trimmed mean to rank Australia's inflation. Australia's six-month annualized rate of trimmed mean inflation, standing at 3.6%, is notably the highest worldwide, surpassing even the United States' 3.2% six-month annualized rate of trimmed mean inflation.
• Australia’s Consumer Price Index (CPI) rose by 1.0% QoQ in the first quarter of 2024, against the expected 0.8% and 0.6% prior. CPI (YoY) increased by 3.6% compared to the forecast of 3.4% for Q1 and 4.1% prior. Australia’s Monthly Consumer Price Index (YoY) rose by 3.5% in March, against the market expectations and the previous reading of 3.4%.
• According to the Japan Times, the proportion of Japanese companies intending to increase their pay scales reached 70.7%, marking a rise of 6.3 percentage points from the previous year. Additionally, the number of companies planning to implement pay-scale hikes and regular pay increases totaling 5% or more amounted to 36.5%, nearly doubling from the previous year. This could provide support for the Yen.

Technical Analysis: AUD/JPY hovers around the major level of 101.50

The AUD/JPY trades around 101.50 on Friday, testing the upper boundary of the daily ascending channel, trading around a fresh five-month high of 101.66. Additionally, the 14-day Relative Strength Index (RSI) is trending above the 50-level, strengthening the bullish sentiment. The immediate resistance is seen at the psychological level of 102.00.

On the downside, immediate support for the AUD/JPY pair could be found at the psychological level of 101.00. If the pair breaches below this level, it suggests a bearish sentiment may prevail and might lead the AUD/JPY cross to a further decline toward the psychological level of 100.00, followed by the 21-day Exponential Moving Average (EMA) at the level of 99.87. Further depreciation will likely test the lower boundary of the ascending channel around the level of 99.00.

AUD/JPY: Daily Chart

• The daily RSI for AUD/JPY reveals that the bulls are in charge, approaching overbought conditions.
• Despite the hourly MACD indicating a short-term dip, the RSI highlights the buyers'  dominance.
• As the cross jumped to multi-year highs, the buyers might eventually run out of gas.

The AUD/JPY exhibits substantial bullish momentum, standing at the 101.39 level and showing an encouraging 0.54% rally. The dominance of bullish trends is evident but a healthy correction might be necessary for the buyers to conquer additional ground.

On the daily chart, the Relative Strength Index (RSI) reveals a positive momentum, with the latest reading nearing the overbought condition. The Moving Average Convergence Divergence (MACD) supports this, printing green bars.

AUD/JPY daily chart

Shifting the attention to the hourly chart, the MACD paints a different picture with its red bars, signaling that in this timeframe, buyers might have already become exhausted. However, the RSI readings suggest steady, positive momentum with figures hovering above 50, apart from a brief dip to 48.

AUD/JPY hourly chart

The AUD/JPY also demonstrates a bullish stance in the broader picture as it positions itself above the 20, 100, and 200-day Simple Moving Averages (SMA). So all signals points to a clear bullish stance, but traders should be alert that if daily indicators reach overbought conditions, the pair may see some healthy downside to consolidate gains.

• AUD/JPY continues its winning streak after the stronger Australian CPI was released on Wednesday.
• Australia’s 10-year government bond yield has surged to 4.49% near five-month highs on waning expectations of the RBA rate cuts.
• The Japanese Yen continues to depreciate as the BoJ is expected to abstain from implementing rate hikes on Friday.

AUD/JPY edges higher for the fourth consecutive session on Thursday. The Australian Dollar (AUD) found support following the release of Australian Consumer Price Index (CPI) data on Wednesday, which exceeded expectations. This development hints at a potentially hawkish stance for the Reserve Bank of Australia’s (RBA) monetary policy, bolstering the AUD and subsequently supporting the AUD/JPY pair.

Australia’s 10-year government bond yield has surged above 4.49%, nearing five-month highs, as robust domestic inflation figures have strengthened expectations of the RBA delaying interest rate cuts. Moreover, easing tensions in the Middle East has fostered a positive market sentiment, benefiting risk-sensitive currencies like the AUD.

The Japanese Yen (JPY) continues to depreciate ahead of the upcoming release of the Bank of Japan’s (BoJ) Monetary Policy Statement scheduled for Friday. It's widely anticipated that the BoJ will abstain from implementing rate hikes in this meeting.

According to reports from Nikkei, the BoJ is likely to deliberate on the "impact of accelerating Yen depreciation," indicating that the central bank may intervene in the foreign exchange markets if the JPY weakens.

Daily Digest Market Movers: AUD/JPY appreciates on hawkish sentiment surrounding RBA

• According to Luci Ellis, Westpac's chief economist and former Assistant Governor (Economic) at the Reserve Bank of Australia, inflation slightly surpassed expectations in the March quarter. They anticipate the Board will maintain interest rates in May and have revised the projected date for the initial rate reduction from September to November this year.
• Australia’s Consumer Price Index (CPI) rose by 1.0% QoQ in the first quarter of 2024, against the expected 0.8% and 0.6% prior. CPI (YoY) increased by 3.6% compared to the forecasted 3.4% for Q1 and 4.1% prior.
• Australia’s Monthly Consumer Price Index (YoY) rose by 3.5% in March, against the market expectations and the previous reading of 3.4%.
• On Tuesday, Australia's Judo Bank Composite Purchasing Managers Index (PMI) surged to a 24-month high, indicating an improvement from the previous month. While the Manufacturing PMI reached an eight-month high, the Services PMI declined to a two-month low. This has bolstered the hawkish sentiment for the RBA’s stance on its interest rate trajectory.
• According to the Japan Times, the proportion of Japanese companies intending to increase their pay scales reached 70.7%, marking a rise of 6.3 percentage points from the previous year. Additionally, the number of companies planning to implement pay-scale hikes and regular pay increases totaling 5% or more amounted to 36.5%, nearly doubling from the previous year. This could provide support for the Yen.
• Reuters reported that Bank of Japan (BoJ) Governor Kazuo Ueda reiterated on Tuesday that the central bank would raise interest rates again if trend inflation accelerates toward its 2% target, in line with its forecast. Ueda also said that it is hard to predict in advance the ideal timeframe for the Bank of Japan (BoJ) to gather sufficient data before considering a policy change.
• The Tokyo Consumer Price Index (CPI) for the year ended April is scheduled to be released during the early Friday session in Japan.

Technical Analysis: AUD/JPY moves above the psychological level of 101.00

The AUD/JPY trades around 101.10 on Thursday, edging towards the upper boundary of the daily ascending channel after surpassing April’s high of 100.81. Moreover, the 14-day Relative Strength Index (RSI) is trending above the 50-level, indicating a bullish sentiment. The immediate resistance is seen at the major level of 101.50.

In case of a downside movement, immediate support for the AUD/JPY pair could be found at the psychological level of 101.00, followed by the major support level of 100.81. A breach below this level might lead to a further decline toward the support level of 99.65, followed by the lower boundary of the ascending channel around the level of 99.00.

AUD/JPY: Daily Chart

• The daily RSI of the AUD/JPY continues its uphill journey, nearing overbought territory, amplifying buying traction.
• Hourly indicators are also strong, with no signs of bears.
• A healthy correction shouldn't be ruled out.

The AUD/JPY market showcases an increasingly bullish trend. The cross stabilized at 100.89 on Wednesday, after rallying to a high at 101.12, its highest since 2014. The general market interest leans towards the buyers as the pair follows an upward trend and surpasses significant levels. However, as the pair gained nearly 1.50% in the last sessions, the cross might be poised for a correction.

On the daily chart, the Relative Strength Index (RSI) of the AUD/JPY pair continues its upward trajectory nearing overbought territory. The Moving Average Convergence Divergence (MACD) also supports the buyers, as it prints a fresh green bar.

AUD/JPY daily chart

Switching the focus to the hourly chart, the hourly Relative Strength Index (RSI) displays a generally increasing trend, pointing toward positive short-term momentum. In addition, the MACD portrays decreasing red bars, denoting the declining momentum of the sellers in the short-term trading hours.

AUD/JPY hourly chart

In the broader outlook, the AUD/JPY indicates a bullish trend, given its current position above the 20, 100, and 200-day Simple Moving Average (SMA). SMAs serve as technical indicators for analyzing price trends by smoothing out price fluctuations. The pair's stance above all three SMAs suggests a strong stance from the bull in the short and long-term perspectives. In addition, the pair rallying to multi-year highs suggests that the bulls are clearly in command, but traders shouldn't be ruled out as indicators might run out of steam.