The AUD/JPY currency pair has experienced a downward trend for the third consecutive day, reaching a multi-week low. This decline reflects ongoing selling pressure, contributing to a drop that positions the pair just below the mid-96.00s. The recent trading activity suggests potential vulnerabilities, particularly following a rejection from the significant 200-day Simple Moving Average.
A slight boost to the Australian Dollar was observed after hawkish comments from Michele Bullock, the Governor of the Reserve Bank of Australia (RBA). Bullock indicated that the RBA remains cautious regarding inflation risks and is unlikely to cut rates in the near future. However, recent trade balance data from Australia revealed only a modest surplus, with imports decreasing by 0.8% and exports rising by 7%. As a result, the lack of stronger economic indicators limits the AUD’s ability to make significant gains.
On the other hand, speculation surrounding a potential rate hike from the Bank of Japan (BoJ) in 2024 adds support to the Japanese Yen (JPY). Positive economic indicators, including a second consecutive month of rising real wages in Japan, reinforce this expectation. Consequently, the potential for an increase in capital expenditure and wages has led to statements from BoJ members indicating the need to adjust monetary conditions to align with economic growth.
Additionally, the current cautious market sentiment further emphasizes the JPY’s appeal as a safe-haven currency compared to the Australian Dollar. This combination of factors indicates that the AUD/JPY cross is likely to continue its downward trajectory. Following a recovery attempt from the psychological level of 90.00 — a one-year low reached in August — it appears that momentum has dissipated, suggesting a challenging outlook for any bullish reversals in the near term.
