Market Data 
- AUD/JPY rebounded due to possible positive sentiment in the market after the Fed decided to maintain the current interest rate.
- The Japanese Yen experienced an increase during the morning hours driven by another possible government intervention.
- Australian Bureau of Statistics reported a Trade Balance (MoM) with a surplus lower than expected in April.
AUD/JPY edges higher on Thursday after paring daily losses. The Japanese Yen (JPY) saw an uptick during the morning driven by another possible government intervention, marking the second occurrence this week. However, it later relinquished its gains following the release of the Bank of Japan (BoJ) Board members’ insights into the monetary policy outlook during Thursday’s session, as documented in the BoJ Minutes from the March meeting.
According to Reuters, a member mentioned that the economy’s response to a short-term rate increase to approximately 0.1% is expected to be minimal. Several members expressed the belief that long-term rates ought to be primarily determined by market forces. Additionally, a few members suggested that the Bank of Japan should eventually consider decreasing its bond purchasing and scaling down its bond holdings.
The Australian Dollar (AUD) receives support, potentially buoyed by the prevailing positive sentiment in the market following the US Federal Reserve’s decision to maintain interest rates at 5.25%-5.50% during Wednesday’s policy meeting. Furthermore, Fed Chair Jerome Powell dismissed the likelihood of a further rate hike, contributing to the positive outlook. Nevertheless, the anticipation of interest rate hikes in Australia later this year remains on the table.
Australia’s Trade Balance and Building Permits data showed weaker-than-expected readings, which could contribute to downward pressure on the Australian Dollar. These disappointing readings could dampen the hawkish sentiment surrounding the Reserve Bank of Australia’s (RBA) stance on maintaining higher interest rates throughout 2024.
Daily Digest Market Movers: AUD/JPY gains ground due to positive market sentiment
- Australia’s Trade Balance (MoM) showed a surplus of 5,024 million in April. The market was expecting an increase to 7,370 million from the previous 7,370 million.
- The Building Permits released by the Australian Bureau of Statistics shows the number of permits for new construction projects rose by 1.9%, falling short of the expected 3.0% in March. The previous month’s reading was -1.9%.
- On Thursday, the ASX 200 Index saw a modest increase following the uptick were heavyweight financial firms. This benchmark index recovers some of the losses from the previous session following the Federal Reserve’s decision to maintain interest rates.
- On Wednesday, the AiG Australian Industry Index declined in April indicating prevailing contractionary conditions for the past twenty-four months. Additionally, the seasonally adjusted Australian Retail Sales released on Tuesday showed a drop in March, compared to the expected increase and the previous growth.
- As reported by the Financial Review, ANZ anticipates that the RBA will commence cutting interest rates in November, following last week’s stronger-than-expected inflation data. In a similar vein, Australia’s largest mortgage lender, Commonwealth Bank, has adjusted its forecast for the timing of the first interest rate cut by the RBA. They are now projecting only one cut in November.
- Masato Kanda, Japan’s top currency diplomat, refrained from confirming whether Japanese authorities had indeed intervened early Thursday in response to a significant strengthening of the JPY. Kanda mentioned that intervention data will be disclosed at the end of the month.
- Japan’s Retail Trade increased by 1.2% year-over-year in March, which was lower than the expected increase of 2.5% and the previous increase of 4.7%. The seasonally adjusted Retail Trade (MoM) decreased by 1.2%, against the expected rise of 0.6%.
- According to Reuters, the Sankei newspaper reported on Tuesday that Japan is considering implementing tax breaks for repatriation of corporate profits into the Yen. This measure may potentially be included in the annual mid-year policy blueprint.
Technical Analysis: AUD/JPY rises to near the psychological level of 102.00
The AUD/JPY traded around 102.00 on Thursday, remaining below the lower boundary of a rising wedge pattern on the daily chart. Traders may await clear direction from the 14-day Relative Strength Index (RSI), which is still above the 50 level.
The key support for the AUD/JPY pair is seen at the lower boundary of the ascending channel around the psychological level of 100.00. A break below this level could strengthen the bearish bias and put pressure on the currency cross to navigate the region around April’s low at 97.78.
Immediate resistance is observed at the lower boundary of the wedge around the psychological level of 103.00. A rebound back into the ascending wedge could potentially improve the bullish bias and push the AUD/JPY pair toward the psychological level of 105.00, followed by the upper boundary of the wedge.
AUD/JPY: Daily Chart
Japanese Yen price this week
The table below shows the percentage change of the Japanese Yen (JPY) against listed major currencies this week. Japanese Yen was the weakest against the Pound Sterling.
| USD | EUR | GBP | CAD | AUD | JPY | NZD | CHF | |
| USD | -0.17% | -0.26% | 0.41% | -0.05% | -1.84% | 0.19% | 0.10% | |
| EUR | 0.17% | -0.09% | 0.58% | 0.12% | -1.66% | 0.36% | 0.28% | |
| GBP | 0.27% | 0.09% | 0.66% | 0.20% | -1.61% | 0.40% | 0.37% | |
| CAD | -0.41% | -0.59% | -0.68% | -0.47% | -2.25% | -0.23% | -0.32% | |
| AUD | 0.05% | -0.12% | -0.21% | 0.46% | -1.77% | 0.24% | 0.16% | |
| JPY | 1.85% | 1.67% | 1.57% | 2.25% | 1.77% | 2.02% | 1.95% | |
| NZD | -0.18% | -0.33% | -0.46% | 0.22% | -0.23% | -2.05% | -0.08% | |
| CHF | -0.09% | -0.26% | -0.37% | 0.31% | -0.15% | -1.94% | 0.08% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent EUR (base)/JPY (quote).
Japanese Yen FAQs
The Japanese Yen (JPY) is one of the world’s most traded currencies. Its value is broadly determined by the performance of the Japanese economy, but more specifically by the Bank of Japan’s policy, the differential between Japanese and US bond yields, or risk sentiment among traders, among other factors.
One of the Bank of Japan’s mandates is currency control, so its moves are key for the Yen. The BoJ has directly intervened in currency markets sometimes, generally to lower the value of the Yen, although it refrains from doing it often due to political concerns of its main trading partners. The current BoJ ultra-loose monetary policy, based on massive stimulus to the economy, has caused the Yen to depreciate against its main currency peers. This process has exacerbated more recently due to an increasing policy divergence between the Bank of Japan and other main central banks, which have opted to increase interest rates sharply to fight decades-high levels of inflation.
The BoJ’s stance of sticking to ultra-loose monetary policy has led to a widening policy divergence with other central banks, particularly with the US Federal Reserve. This supports a widening of the differential between the 10-year US and Japanese bonds, which favors the US Dollar against the Japanese Yen.
The Japanese Yen is often seen as a safe-haven investment. This means that in times of market stress, investors are more likely to put their money in the Japanese currency due to its supposed reliability and stability. Turbulent times are likely to strengthen the Yen’s value against other currencies seen as more risky to invest in.
