The AUDJPY pair has been making headlines recently as it broke below the significant level of 104.400. This move was influenced by the decision of the Bank of China to hold on to its interest rates. Additionally, we will discuss the future outlook for this market based on the information provided.
The pair has lost ground in the bigger picture due to the possibility of risk aversion sentiment. However, the AUDUSD pair seems to be gaining strength following China’s decision to hold its interest rates. This divergence in performance between the two pairs suggests that market sentiment is playing a significant role in their movements.
As of this week, the AUD/JPY pair has started on weak footing, trading around the 104.150 level in the European session. The Bank of
China’s decision to maintain the 1-year Loan Prime Rate (LPR) at 3.44%. Also, the 5-year Loan Prime Rate at 3.90% has contributed to the cautious trading environment. Traders are eagerly awaiting the release of the Reserve Bank of Australia (RBA) Meeting Minutes, which are scheduled for tomorrow (Tuesday). This release is expected to provide further insights into the future direction of the Australian dollar.
Influence on the Japanese Yen
The Australian pair may face hindrances in its upward momentum due to the low yield of Australia’s ten-year government bond, which is currently hovering around 4.2%, which is the lowest it has been. Additionally, the Reserve Bank of Australia’s interest rate hikes have been limited due to sluggish wage growth. These factors contribute to a more cautious outlook for the Australian dollar.
The pressure exerted by other currencies has given a boost to the pair. However, traders are hopeful that the Bank of Japan will reduce bond purchases in its June meeting. This expectation has the potential to impact the Japanese yen and the overall direction of the AUDJPY pair.
The future of the AUD/JPY remains unclear. Market sentiment and central bank decisions will continue to play a crucial role in determining the direction of this pair. Traders should closely monitor the actions of the Bank of Japan and the Reserve Bank of Australia, as well as any developments in market sentiment. This will help to gain insights into the potential future movements of the AUDJPY pair.
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