BoJ Rate Hike Expectations Keep AUD/JPY in Tight Range

The AUD/JPY cross has traded flat near 110.10 on Monday during European trading hours as expectations grow that the Bank of Japan (BoJ) will raise its policy interest rate to 1.25% at its September meeting.

This would be the highest level in about 31 years, with the last time it stood at this level being in April 1995.

MUFG analysts believe a 25 bps hike is already largely priced in and that for the yen to strengthen further, the BoJ must signal its intention to stick to a faster pace of hikes.