AUD/JPY Edges Higher as BoJ Hopes Meet RBA Tightening Bets

The Australian Dollar (AUD) has strengthened against the Japanese Yen (JPY), trading around 112.65 at the time of writing, up 0.39% on the day.

This move is attributed to growing expectations of higher interest rates in Australia, as well as speculation that the Bank of Japan (BoJ) may adopt a more hawkish tone at its upcoming meeting on September 17-18.

According to State Street Investment Management's Masahiko Loo, investors are beginning to price in the possibility that Japan's monetary policy normalization could continue into 2027.

However, concerns over Japan's public finances, particularly a record-high ¥143 trillion initial general-account budget request for the fourth consecutive year, may temper some of this support for the JPY.