- The Aud/JPY quotes in positive territory around 98.20 in Friday’s Asian session, rising 0.22% in the day.
- The BOJ rose the interest rate to 0.50% at the January meeting, as expected.
- Trump said he would prefer not to wear tariffs against China.
The Aud/JPY crossing remains firm about 98.20 during Friday’s Asian negotiation hours. However, the rise in the crossing could be limited in the middle of a stronger Japanese (JPY) after the interest of interest rates of the Bank of Japan (BOJ).
As expected widely, the BOJ decided to raise the objective of the short-term rate at 25 basic points (PB) of 0.15% -0.25% to 0.40% -0.50% at its January meeting on Friday. The Japanese Central Bank raised the interest rate at its highest level since 2008 after having stable it during three consecutive meetings. The JPY reduces losses in an immediate reaction to the Boj’s rates decision.
The data published by the Japan Statistics Office on Friday showed that the National Consumer Price Index (CPI) of the country rose 3.6% year -on -year in December, compared to 2.9% of the previous reading.
In addition, the national CPI excluding fresh foods stood at 3.0% year -on -year in December compared to the previous 2.7%, in line with the market consensus of 3.0%. Finally, the CPI excluding fresh food and energy rose 2.4% year -on -year in December, compared to the previous reading of 2.4% (reviewed from 2.7%).
On the other hand, the president of the United States, Donald Trump, said Friday that he would prefer not to wear tariffs against China, but described tariffs as a “tremendous power.” This positive development could provide some support to the Australian dollar, since China is an important commercial partner of Australia.
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.
