AUD/JPY Cross Snaps Two-Day Winning Streak Amid Weaker Aussie Dollar

The Australian Dollar (AUD) remains under pressure against the Japanese Yen (JPY), snapping a two-day winning streak and halting its recent recovery. Spot prices for the AUD/JPY cross have slid back to the 111.00 mark, weighed down by the broadly weaker AUD.

A modest US Dollar (USD) strength has prompted some profit-taking in the AUD, following its rally to a seven-week high. Analysts at Standard Chartered believe that the Reserve Bank of Australia (RBA) is done raising interest rates and will maintain the status quo next week, contributing to the AUD's underperformance.

However, they caution that there is a risk of another RBA rate hike in Q4 if the central bank remains unconvinced that demand is slowing sufficiently to contain underlying price pressures. The intraday slide has not been affected by the upbeat Australian Trade Balance data, which showed a surplus of A$1,929 million in June.

A softer JPY could limit deeper losses for the AUD/JPY cross, but concerns about Japan's worsening fiscal condition are weighing on the currency. Japan's ruling Liberal Democratic Party (LDP) has backed a proposal to cut the food consumption tax from 8% to 1% for two years starting in April 2027.