- The Aud/JPY advances for the fourth consecutive negotiation day, while the Japanese yen works below his peers on Tuesday.
- The Boja is confident in a greater monetary hardening if the underlying inflation returns to its 2%target.
- Investors expect the result of the commercial meeting between the USA and China in London.
The Aud/JPY pair rises to about 94.50 during Asian negotiation hours, extending its winning streak by the room negotiation day on Tuesday. The crossing is strengthened as the Japanese yen (JPY) works below their peers, while investors are cautious about whether the Bank of Japan (Boj) will increase interest rates this year again.
And in Japanese price today
The lower table shows the rate of change of Japanese Yen (JPY) compared to the main currencies today. Yen Japanese was the weakest currency against the New Zealand dollar.
| USD | EUR | GBP | JPY | CAD | Aud | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.20% | 0.09% | 0.23% | 0.04% | -0.07% | -0.05% | 0.08% | |
| EUR | -0.20% | -0.10% | 0.00% | -0.13% | -0.25% | -0.25% | -0.10% | |
| GBP | -0.09% | 0.10% | 0.06% | -0.03% | -0.15% | -0.15% | 0.00% | |
| JPY | -0.23% | 0.00% | -0.06% | -0.15% | -0.32% | -0.36% | -0.22% | |
| CAD | -0.04% | 0.13% | 0.03% | 0.15% | -0.13% | -0.12% | 0.04% | |
| Aud | 0.07% | 0.25% | 0.15% | 0.32% | 0.13% | 0.02% | 0.15% | |
| NZD | 0.05% | 0.25% | 0.15% | 0.36% | 0.12% | -0.02% | 0.16% | |
| CHF | -0.08% | 0.10% | -0.01% | 0.22% | -0.04% | -0.15% | -0.16% |
The heat map shows the percentage changes of the main currencies. The base currency is selected from the left column, while the contribution currency is selected in the upper row. For example, if you choose the Japanese yen from the left column and move along the horizontal line to the US dollar, the percentage change shown in the picture will represent the JPY (base)/USD (quotation).
On Monday, Japan Prime Minister Shigeru Ihiba warned that the increase in interest rates on the part of the Boj could limit the government’s indebtedness power by increasing the cost of funds, an element that could hinder Tokyo spending plans. The PM ishiba statement occurred at a time when Tokyo has expressed concerns about economic perspectives due to the repercussions of the tariff policy of the president of the United States (USA UU.), Donald Trump.
However, the governor of the Boj, Kazuo Ueda, has maintained the door open for greater hardening of monetary policy. Earlier in the day, Kazuo Ueda told Parliament that “we will increase interest rates if we have enough confidence that the underlying inflation is approaching 2% or remains around 2%.” According to a Reuters report, the BOJ has indicated that the underlying inflation, a specific indicator of the demand -based price pressures, has remained below its annual objective, even when the general inflation to the consumer has been well above 2% for at least the last three years.
Meanwhile, the Australian dollar (Aud) works better than its peers in the midst of optimism that commercial discussions between the US and China in London, which have entered their second day, will end in a positive note.
The Economic Advisor of the White House, Kevin Hassett, expressed confidence in an interview with CNBC on Monday that “export controls will be relieved and rare earth will be released in volume” after the meeting.
Since Australia is China’s main commercial partner, an improvement in Chinese economic perspectives strengthens the Australian dollar.
Faqs Australian dollar
One of the most important factors for the Australian dollar (Aud) is the level of interest rates set by the Australian Reserve Bank (RBA). Since Australia is a country rich in resources, another key factor is the price of its greatest export, iron mineral. The health of the Chinese economy, its largest trading partner, is a factor, as well as inflation in Australia, its growth rate and commercial balance. The feeling of the market, that is, if investors are committed to more risky assets (Risk-on) or seek safe shelters (Risk-Off), it is also a factor, being the positive risk-on for the AUD.
The Australian Reserve Bank (RBA) influences the Australian dollar (AUD) by setting the level of interest rates that Australian banks can lend to each other. This influences the level of the interest rates of the economy as a whole. The main objective of the RBA is to maintain a stable inflation rate of 2% -3% by adjusting the interest rates or the low. Relatively high interest rates compared to other large central banks support the AU, and the opposite for the relatively low. The RBA can also use relaxation and quantitative hardening to influence credit conditions, being the first refusal for the AU and the second positive for the AUD.
China is Australia’s largest commercial partner, so the health of the Chinese economy greatly influences the value of the Australian dollar (Aud). When the Chinese economy goes well, it buys more raw materials, goods and services in Australia, which increases the demand of the AU and makes its value upload. The opposite occurs when the Chinese economy does not grow as fast as expected. Therefore, positive or negative surprises in Chinese growth data usually have a direct impact on the Australian dollar.
Iron mineral is the largest export in Australia, with 118,000 million dollars a year according to data from 2021, China being its main destination. The price of iron ore, therefore, can be a driver of the Australian dollar. Usually, if the price of iron ore rises, the Aud also does, since the aggregate demand of the currency increases. The opposite occurs when the price of low iron ore. The highest prices of the iron mineral also tend to lead to a greater probability of a positive commercial balance for Australia, which is also positive for the AUD.
The commercial balance, which is the difference between what a country earns with its exports and what it pays for its imports, is another factor that can influence the value of the Australian dollar. If Australia produces highly requested exports, its currency will gain value exclusively for the excess demand created by foreign buyers who wish to acquire their exports to what you spend on buying imports. Therefore, a positive net trade balance strengthens the AUD, with the opposite effect if the commercial balance is negative.
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.
