AUD/JPY Flattens as BoJ Hikes Loom Amid Tokyo Inflation Spike

The Australian Dollar (AUD) traded flat against the Japanese Yen (JPY) at around 109.50 during the European trading session on Friday, after recovering early losses.

The cross rebounded as the Japanese Yen struggled to hold onto gains despite the release of hot Tokyo Consumer Price Index (CPI) data for September, which showed a significant acceleration in inflation.

Tokyo CPI ex. Fresh Food jumped to 2.7% Year-on-Year (YoY) from 1.8% in August, while Tokyo CPI ex. Food, Energy accelerated to 3% YoY from the previous reading of 2%. The hotter-than-projected inflation data is likely to boost hawkish Bank of Japan (BoJ) interest rate expectations.

The BoJ Summary of Opinions (SoP) released on Thursday showed that several policymakers supported more interest rate hikes, with one member stating that rates should be raised in line with the economy and price developments.