- AUD/JPY hovers around 95.05 following the Reserve Bank of Australia (RBA) rate decision.
- RBA decided to hold the rate unchanged at 4.1%, as widely expected.
- BoJ Governor said there was a long way to go for BoJ before exiting its ultra-loose monetary policy.
- The attention will shift to the Australian PMI ahead of the Trade Balance.
The AUD/JPY cross attracts some buyers and hovers around 95.15 during the Asian session on Tuesday. The pair posts modest gains following the Reserve Bank of Australia (RBA) monetary policy meeting. However, the fear of FX intervention by the Japanese authorities might cap the upside of the cross in the next sessions.
The Reserve Bank of Australia (RBA) board members decided to maintain the interest rate unchanged at 4.10% at its October monetary policy meeting on Tuesday. RBA Governor Michele Bullock stated that the central bank needed to see more data before changing the cash rate. Bullock added that the RBA was closely watching the rate of inflation in Australia and that more rate hikes may be required. This, in turn, boosts the Australian Dollar (AUD) against the Japanese Yen (JPY) and acts as a tailwind for the AUD/JPY cross.
On the JPY’s front, Japanese Finance Minister Shunichi Suzuki said on Monday that he was watching currency moves “cautiously”. Additionally, BoJ Governor Kazuo Ueda said on Saturday that there was "a distance to go" for BoJ before exiting its ultra-loose monetary policy. According to the BoJ Summary of Opinions at the Monetary Policy Meeting on September 21 and 22, BOJ said that they do not need to make additional tweaks to YCC as long-term rates moving fairly stably and said that end to negative rate must be tied to the success of achieving 2% inflat
About the data, the overall business conditions of the large manufacturing companies in Japan improved in the third quarter (Q3). The Japanese Tankan Large Manufacturing Index (Q3) came in at 9.0 from 5.0 in the previous reading, above the market consensus of 6.0.
Looking ahead, market participants will keep an eye on the Australian S&P Global Composite PMI and Services PMI for September due on Wednesday. The Australia’s Trade Balance for August will be released on Thursday and Japan’s Labor Cash Earnings will be due on Friday. Traders will take cues from these figures and find trading opportunities around the AUD/JPY cross.
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