- AUD/JPY fell following the Bank of Japan’s decision to keep its short-term interest rate unchanged at 0.25%.
- The BoJ’s Outlook Report for the third quarter indicated that it will continue to raise policy rates, as long as the economy and prices align with its forecasts.
- Australian retail sales rose 0.1% month-on-month in September, up from an expected 0.3% and previous growth of 0.7%.
AUD/JPY gives back its recent gains from the previous session, trading around 100.50 during Asian hours on Thursday. The drop in the AUD/JPY cross comes as the Japanese Yen (JPY) strengthens following the Bank of Japan’s (BoJ) policy announcement. The BoJ opted to keep its short-term interest rate target at 0.25% after concluding its two-day monetary policy review, a decision that was in line with market expectations for stability.
According to the BoJ’s Third Quarter Outlook Report, the central bank plans to continue raising policy rates as long as the economy and prices align with its forecasts, particularly given that real interest rates are currently very low. The Bank of Japan aims to conduct monetary policy with a focus on sustainably and stably achieving its 2% inflation target.
However, it is expected that Japan’s political landscape may require expansionary fiscal policies, which would complicate the BoJ’s ability to raise interest rates further. Concerns about possible government intervention, coupled with a cautious sentiment in the market, are providing some support to the safe-haven Japanese Yen. Investors now await the post-meeting press conference, where comments from BoJ Governor Kazuo Ueda are anticipated.
On the AUD front, seasonally adjusted Australian retail sales rose 0.1% mom in September, falling short of the 0.3% expected and significantly below the 0.7% growth seen in the previous month. On a quarterly basis, retail sales rose 0.5% in the third quarter, recovering from a 0.3% decline in the previous quarter.
Additionally, China’s NBS non-manufacturing PMI rose to 50.2 in October, from 50.0 in the previous month, although it fell short of market expectations of 50.4. Meanwhile, the NBS Manufacturing PMI rose to 50.1, surpassing the previous reading of 49.8 and slightly beating the forecast of 50.0. Given the close trading relationship between China and Australia, any changes to the Chinese economy could significantly impact the Australian market.
Economic indicator
BoJ interest rate decision
He Bank of Japan sets the interbank interest rate. This rate affects a range of interest rates set by commercial banks, building societies and other institutions towards their own savers and borrowers. It also affects the price of financial assets, such as bonds, stocks and exchange rates, which affect consumer and business demand in a variety of ways. If the Bank of Japan has a firm outlook on the Japanese economy and increases the current interest rate, this is bullish for the yen. On the other hand, a mild outlook that leads the bank to reduce or maintain current rates will be bearish for the yen.
Last post:
Thu Oct 31, 2024 02:48
Frequency:
Irregular
Current:
0.25%
Dear:
0.25%
Previous:
0.25%
Fountain:
Bank of Japan
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
