AUD Holds Gains as BoJ Decision Keeps JPY Under Pressure
The Australian Dollar (AUD) continued to hold onto its intraday gains on Friday, despite China's disappointing official PMIs. The Bank of Japan's decision to keep interest rates unchanged also failed to weigh on the AUD/JPY cross.
The wide rate gap between Japan and other economies has kept the Japanese Yen under pressure, lending support to the AUD/JPY cross. Spot prices stuck near the 113.00 mark after the BoJ announcement, snapping a three-day losing streak for the pair.
Analysts at Deutsche Bank noted that the latest inflation print had taken some of the heat out of the case for further policy tightening by the Reserve Bank of Australia (RBA). They highlighted that annual core inflation edged up from +3.5% to +3.6%, but remained below the consensus estimate, reducing the urgency for additional interest rate hikes.
The market focus now shifts to the RBA policy meeting on August 11, where diminishing odds for an immediate interest rate hike by the RBA might hold back bullish traders from placing fresh bets on the AUD/JPY cross.