AUD/JPY Rises Above 104.50 As Bank Of Japan Keeps Rates Unchanged

AUD/JPY strengthened to around 104.65 during Asian trading hours on Friday. The AUD/JPY cross moved higher following the Bank of Japan (BoJ) announcement of its policy decision. Investors will shift their attention to the Reserve Bank of Australia’s interest rate decision next week.

BoJ board members decided to keep the policy rate at 0% after concluding a two-day June monetary policy review meeting. This is the second consecutive meeting in June where the BoJ has kept interest rates unchanged, and the decision was in line with market expectations. The Japanese yen (JPY) attracted some sellers after the BoJ decided not to reduce its bond purchases. Toyoaki Nakamura, a member of the BoJ’s policy board, dissented from the JGB purchase decision, saying the central bank should decide to reduce the scale of bond purchases after reassessing economic activity and price conditions in its July 2024 outlook report.

On the AUD side, expectations that the RBA will keep its current interest rate unchanged in June provided some support to the AUD. Nomura senior economist Andrew Ticehurst said the risk of the Reserve Bank raising interest rates was low, but the RBA’s response to high inflation data would be to keep interest rates at current high levels for longer.

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