- The Aud/JPY gains strength around 91.90 in the Asian session on Thursday.
- The BOJ maintained stable interest rates at its May meeting, as was widely anticipated.
- The Australian commercial surplus rises to 6,900 million intermensual in March, exceeding the estimate.
The Aud/JPY crossroads earns traction about 91.90 during Thursday’s Asian negotiation hours. The Japanese Yen (JPY) is negotiated slightly weaker against the Australian dollar after the Bank of Japan (Boj) decided to maintain its policy rate without changes in its May meeting on Thursday. The attention will move to the BOJ press conference later on Thursday.
The members of the Boj Board decided to leave unchanged the objective of the short-term interest rate in the range of 0.40% -0.50% on Thursday, as expected widely. The Japanese Central Bank pointed out in the statement that the economy will probably slow down as the impact of commercial policy slows global growth.
The BOJ stressed that it is important to carefully monitor factors such as developments in economic activity, and the Central Bank will continue to increase the policy rate if the economy and prices move in line with its prognosis. Market participants will closely follow the press conference of the governor of the BOJ, Kazuo Ueda, which could offer some clues about the trajectory of interest rates in Japan.
In the Australian Front, the optimistic data of the March Balance of Australia could boost the Aud against JPY. The country’s commercial surplus increased to 6,900 million intermensual in March, compared to the expectation of 3,130 million and the previous reading of 2,852 million (reviewed of 2,968 million), the Australian Statistics Office reported Thursday. The strong surplus was driven by an increase of 7.6% in exports and a 2.2% drop in imports for the month.
Japan Faqs Bank
The Bank of Japan (BOJ) is the Japanese Central Bank, which sets the country’s monetary policy. Its mandate is to issue tickets and carry out monetary and foreign exchange control to guarantee the stability of prices, which means an inflation objective around 2%.
The Bank of Japan has embarked on an ultralaxa monetary policy since 2013 in order to stimulate the economy and feed inflation in the middle of a low inflation environment. The bank’s policy is based on the Quantitative and Qualitative Easing (QQE), or ticket printing to buy assets such as state or business bonds to provide liquidity. In 2016, the Bank redoubled its strategy and relaxed even more policy by introducing negative interest rates and then directly controlling the performance of its state bonds to 10 years.
The massive stimulus of the Bank of Japan has caused the depreciation of the Yen in front of its main monetary peers. This process has been more recently exacerbated due to a growing divergence of policies between the Bank of Japan and other main central banks, which have chosen to abruptly increase interest rates to combat inflation levels that have been in historical maximums. Japan Bank’s policy to maintain low types has caused an increase in differential with other currencies, dragging the value of YEN.
The weakness of the YEN and the rebound in world energy prices have caused an increase in Japanese inflation, which has exceeded the 2% objective set by the Bank of Japan. Even so, the Bank of Japan judges that the sustainable and stable achievement of the 2%objective is not yet glimpsed, so an abrupt change of current monetary policy seems unlikely.
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.
