AUD/JPY Slumps on Soaring Tokyo Inflation
The AUD/JPY cross weakened on Friday as Japan's Tokyo inflation gauge rose sharply in September, bolstering the case for further interest rate hikes from the Bank of Japan.
According to data released by the Statistics Bureau of Japan, the headline Tokyo Consumer Price Index (CPI) rose 2.7% in September, versus 1.9% prior.
Senior economist Masato Koike at Sompo Institute Plus said that core inflation will continue to accelerate as a trend due to rising energy costs from the Middle East conflict and subsequent second-round effects.
The Bank of Japan's Governing Council is split, with some hawks arguing for further tightening, while others warned against hasty action. However, Rabobank notes that with improving Japan business sentiment, the BoJ may not have a choice but to raise rates.