AUD/JPY Holds Steady Amid BOJ Hike Bets and RBA Tightening Expectations

The AUD/JPY exchange rate remains near 110.55 as investors weigh expectations of monetary tightening in Japan and Australia. Rising energy prices have increased Japan's import bill, putting pressure on its trade balance.

Attention is focused on the Bank of Japan's decision this Friday, with markets fully pricing a 25-basis-point rate rise to 1.25%, the highest since April 1995. Forward guidance and the prospect of another move in December could influence the JPY and cap gains in the cross.

The Reserve Bank of Australia has kept its Official Cash Rate at 4.35% for three consecutive meetings, while the RBA Rate Tracker suggests a nearly 78% chance of a lift to 4.6% at the next meeting.