AUD/JPY rises to near 105.00 as fiscal concerns weigh on Yen
AUD/JPY remains in the positive territory, trading around 104.90 during the Asian hours on Monday. The currency cross remains stronger as the Japanese Yen (JPY) faces pressure amid fiscal concerns over Prime Minister Sanae Takaichi’s large-scale spending plans to spur growth. Traders also watched for possible currency intervention, as business leaders urged the government to tackle the Yen’s weakness.
Bank of Japan (BoJ) Governor Kazuo Ueda reiterated that the central bank will continue raising interest rates if economic and price projections are realized. Ueda said adjusting the degree of monetary support would help achieve sustainable growth and expects Japan’s economy to maintain a cycle of moderate wage and price increases.
The upside of the risk-sensitive AUD/JPY cross could be restrained amid safe-haven demand, driven by a renewed rise in geopolitical risks following the United States’ (US) capture of Venezuelan President Nicolas Maduro.
China’s RatingDog released on Monday the Services Purchasing Managers’ Index (PMI), which declined to 52.0 in December from 52.1 in November. It is important to note that any change in the Chinese economy could impact the AUD as China and Australia are close trading partners.
The AUD may find support as expectations grow for interest rate hikes by the Reserve Bank of Australia (RBA). Traders are awaiting Australia’s Q4 CPI report on January 28, with analysts saying a stronger-than-expected core inflation print could trigger a rate hike at the RBA’s February 3 meeting.
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