AUD/JPY Pair Stalls Bounce Amid RBA Rate Hike Expectations
The Australian Dollar (AUD) has continued its downward trend against the Japanese Yen (JPY), snapping a two-day winning streak and stalling this week's bounce. Spot prices for AUD/JPY fell back to the 111.00 mark in the first half of the European session amid broader weakness in the AUD.
The decline is attributed to a modest increase in US Dollar (USD) strength, prompting some profit-taking after the recent rally to a seven-week high. Additionally, expectations that the Reserve Bank of Australia (RBA) will maintain its interest rate stance next week have contributed to the AUD's underperformance and downward pressure on the AUD/JPY cross.
Analysts at Standard Chartered believe that their base case remains that the RBA is done with rate hikes in the foreseeable future, reflecting their view that the current policy stance is sufficiently restrictive for now. However, they caution that there's a risk of another RBA rate hike in Q4 if the central bank remains unconvinced that demand is slowing to contain price pressures.