- The AUD/JPY wins some positive traction and moves away from a minimum of several weeks established on Thursday.
- The hopes of de -escalation of the tensions between the US and China support the AU and support cash prices.
- Divergent expectations of RBA and BOJ policy justify caution before positioning for additional profits.
The Aud/JPY crossing attracts some purchase on Friday and, for now, there seems to have broken a three -day streak at levels below 92.00, or a minimum of three weeks touched the previous day. The rise intradic movement raises cash prices to a new daily maximum, around the 92.50 region during the early European session, and is sponsored by the appearance of some purchase around the Australian dollar (Aud).
The Undersecretary of State of the United States, Christopher Landau, spoke with the Vice Minister of Foreign Affairs of China, Ma Zhaoxu, earlier today and discussed a wide range of issues of mutual interest. Both agreed on the importance of keeping the lines of communication open, which, together with a US dollar in general, provides a slight impulse to the AUD and the Audce/JPY crossing. However, a combination of factors justifies a certain caution for the bullies.
The China Ministry of Commerce warned Wednesday on legal actions against individuals or organizations that implement US export restrictions on Huawei’s Ascend chips. This highlights persistent tensions between the two largest economies in the world and should maintain a limit on optimism. Apart from this, the moderate perspective of the Bank of the Australian Reserve (RBA) helps to limit the Aud and the Aud/JPY crossing.
The Australian Central Bank, as expected, reduced its reference interest rate at 25 basic points (BPS) at 3.8% on Tuesday and left the door open for more feat cuts. This marks a great divergence compared to the hard line expectations of the Bank of Japan (BOJ), which, together with the sustained purchase of safe refuge, is considered to support the Japanese Yen (JPY) and could stop the audists of the AUD/JPY to open new positions.
BOJ officials recently showed willing to increase interest rates even more if the economy and prices improve how it is projected. In addition, the highest consumer inflation figures in Japan published earlier today reaffirmed the expectations that the BOJ will continue to increase interest rates. Therefore, it will be prudent to wait for a strong purchase of continuation before confirming a short -term minimal for the Aud/JPy crossing and positioning for additional profits.
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.
