AUD/JPY is trading with moderate losses below the mid-96.00 zone, looking vulnerable near multi-week lows.

• AUD/JPY falls for a third consecutive day and falls to a multi-week low.
• RBA’s Bullock’s hawkish comments boost the Australian dollar and lend support to the cross.
• Expectations of a new BoJ rate hike in 2024 benefit the Yen and limit the pair’s gains.

The AUD/JPY pair remains under some selling pressure for the third consecutive day on Thursday and drops to a three-and-a-half-week low during the Asian session on Thursday. Spot prices are currently trading just below the mid-96.00 zone and look vulnerable to extending this week’s rejection slide from the key 200-day Simple Moving Average (SMA).

The Australian Dollar (AUD) got a mild boost following hawkish comments from Reserve Bank of Australia (RBA) Governor Michele Bullock, who said the board remains vigilant to upside risks to inflation and does not expect to be in a position to cut rates anytime soon. That said, unimpressive Australian Trade Balance data, showing the surplus widened to A$6.009 billion in July amid a 0.8% drop in imports and a 7% rise in exports, caps any significant appreciative move.

Apart from this, expectations that the Bank of Japan (BoJ) will hike rates again in 2024, reinforced by data showing that real wages in Japan rose for the second consecutive month in July, continue to benefit the Japanese Yen (JPY) and further contribute to limiting the upside of the AUD/JPY cross. Moreover, BoJ board member Hajime Takata said that the central bank should tighten monetary conditions one step further if it can confirm that businesses will continue to increase capital spending, wages, and prices.

Meanwhile, cautious market sentiment is seen as another factor benefiting the JPY’s relative safe-haven status against its Australian counterpart. This, in turn, suggests that the path of least resistance for the AUD/JPY cross is to the downside and suggests that the recent recovery move from the vicinity of the psychological 90.00 mark, or the over-one-year low touched in August, has already run its course.