AUD Slips Against JPY Amid Escalating Middle East Tensions

The Australian Dollar (AUD) has been slipping against the Japanese Yen due to increased risk aversion in the market. The escalating Middle East conflicts and tanker attacks have weighed heavily on global risk sentiment, causing the AUD/JPY to depreciate for the fourth consecutive day.

Trading around 110.70 during European hours on Thursday, the currency cross has been affected by the challenges facing the Australian Dollar amid escalating tensions in the region.

The recent developments show that Iran and the US have struck tankers in the biggest wave of attacks on shipping since the war began, threatening to worsen the disruption of energy supplies from the Gulf. This has pushed oil prices higher, intensifying inflationary pressures that have already started feeding into Australia's consumer prices.

Expectations are growing for a fourth Reserve Bank of Australia (RBA) interest rate hike this year, which could limit the AUD's downside. RBA officials have warned of upside inflation risks, and Assistant Governor Sarah Hunter stated that the central bank may need to raise interest rates again if inflation proves more persistent than expected.