AUD/JPY CLIMBS ABOVE 104.50, BOJ KEEPS INTEREST RATE UNCHANGED

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  • AUD/JPY gains ground near 104.65 in Friday’s Asian session, up 0.47% on the day. 
  • The BoJ decided to maintain the key interest rate at 0% on Friday, as expected by the market. 
  • The RBA is anticipated to keep interest rates unchanged at its June meeting next week. 

The AUD/JPY cross gathers strength around 104.65 during the Asian trading hours on Friday. The cross edges higher after the Bank of Japan (BoJ) announced its policy decision. Investors will shift their attention to the Reserve Bank of Australia (RBA) interest rate decision next week. 

The Bank of Japan (BoJ) board members decided to keep its policy rate at 0% after concluding its two-day monetary policy review meeting for June. The Japanese central bank held rates for the second straight meeting in June, and the decision matched market expectations. The Japanese Yen (JPY) attracts some sellers after the BoJ decided not to reduce bond purchases. The BoJ policy board member Toyoaki Nakamura dissented to a decision on JGB purchases, saying the central bank should decide to reduce it after reassessing developments in economic activity and prices in the July 2024 outlook report.

On the Aussie front, the expectation that the RBA will maintain current interest rates in June provides some support to the Australian Dollar (AUD). A near 90% majority of analysts predicted interest rates to remain unchanged next quarter, followed by a 25 basis point (bps) cut to 4.10% by year-end, according to Reuters polls. "The risk of a rate hike is very low, but the RBA's response to high inflation data would be to keep current high rates for longer," said Nomura senior economist, Andrew Ticehurst


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