AUD/JPY Surges on Strong Inflation Data and Rising Rate Hike Bets

The AUD/JPY currency pair is trading near 114.45 in early European hours on Thursday, as the Australian Dollar outperforms the Japanese Yen.

This move follows hotter-than-anticipated Australian Consumer Price Index data, which has strengthened expectations that the Reserve Bank of Australia will deliver another rate increase.

Market participants are reassessing the likelihood of a fourth interest rate hike by the RBA this year. According to Reuters, the probability of a move in September has risen to 38%, compared with 17% previously.

The stronger-than-expected inflation data also affects the Bank of Japan's stance and intervention risks. Deputy Governor Ryozo Himino highlighted the importance of timely interest rate adjustments in light of rising inflation risks.