AUD/JPY Cross Hovers Above 110 as BoJ Rate Hike Looms

The AUD/JPY cross is trading in positive territory around 110.70 during early European trading hours on Wednesday, due to the Japanese Yen's weakness against the Australian Dollar.

Rising energy prices caused by the ongoing conflict in the Middle East are increasing import expenses for Japan's oil-dependent economy.

Analysts expect the Bank of Japan (BoJ) to announce a 25-basis-point interest rate hike at its upcoming policy meeting on Friday, which would bring borrowing costs to their highest level since April 1995.

Traders will closely monitor BoJ Governor Kazuo Ueda's speech about the pace of future rate hikes and how far the central bank could take rates under the current tightening cycle. Hawkish comments from Ueda could boost the JPY and act as a headwind for the cross in the near term.