- The AUD/JPY rides from a maximum of almost two months reached Tuesday in the middle of a notable strength of the JPY.
- The bets that the BOJ will raise interest rates in 2025 continue to act as a tail wind for the JPY.
- Commercial optimism and the reduction of bets due to aggressive RBA rate cuts could limit losses for the crossing.
The Aud/JPY crossing attracts some vendors during the Asian session on Wednesday, and for now, there seems to have interrupted a two -day winning streak in the 95.65 area, or a maximum of almost two months reached the previous day. Cash prices are currently negotiated around the region of 95.15, with a fall of almost 0.30% in the day in the middle of a Japanese yen (JPY) in general stronger.
The vice governor of the Bank of Japan (BOJ), Shinichi Uchida, reiterated on Tuesday that the Central Bank will continue to raise interest rates if the economy and prices improve how it is projected. This adds to the fears of wider and entrenched price increases in Japan and supports the case for a greater normalization of the policy by the BOJ, which acts as a tail wind for the JPY and exerts some pressure on the aud/JPY crossing.
The Australian dollar (Aud), on the other hand, receives support from a hottest domestic salary price index than expected. In addition, the de -escalation of the commercial war between the US and China moderates the most aggressive rate cuts by the Bank of the Australian Reserve (RBA). Apart from this, an American dollar (USD) weaker benefits the AU and slows the operators to carry out aggressive bearish bets around the Audce/JPY crossing.
The aforementioned background supports the prospects for buyers at lower levels, justifying a certain caution before confirming that cash prices have reached their maximum point in the short term. The operators now expect the publication of the Crucial Monthly Employment Report of Australia during the Asian session on Thursday, which should provide a new impulse to the Aud/JPY crossing.
Commercial War between the US and China Faqs
In general terms, “Trade War” is a commercial war, an economic conflict between two or more countries due to the extreme protectionism of one of the parties. It implies the creation of commercial barriers, such as tariffs, which are in counterbarreras, increasing import costs and, therefore, the cost of life.
An economic conflict between the United States (USA) and China began in early 2018, when President Donald Trump established commercial barriers against China, claiming unfair commercial practices and theft of intellectual property by the Asian giant. China took retaliation measures, imposing tariffs on multiple American products, such as cars and soybeans. The tensions climbed until the two countries signed the Phase one trade agreement between the US and China in January 2020. The agreement required structural reforms and other changes in China’s economic and commercial regime and intended to restore stability and confidence between the two nations. Coronavirus pandemia diverted the attention of the conflict. However, it is worth mentioning that President Joe Biden, who took office after Trump, kept the tariffs and even added some additional encumbrances.
Donald Trump’s return to the White House as the 47th US president has unleashed a new wave of tensions between the two countries. During the 2024 election campaign, Trump promised to impose 60% tariff particularly in investment, and directly feeding the inflation of the consumer price index.
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.
