Australian Dollar remains depressed; downside seems limited as fiscal concerns weigh on Yen
The AUD/JPY cross attracts some sellers on Thursday, snapping a two-day winning streak and stalling this week's solid bounce move from its lowest level since late March.
On Thursday, the Australian Dollar (AUD) struggled to maintain its recent upward momentum, as the AUD/JPY cross retreated to the 111.00 mark during the early European session. This decline was primarily driven by a modest US Dollar (USD) strength and profit-taking, following the AUD's surge to a seven-week high. The Reserve Bank of Australia (RBA) reportedly seems to have completed its interest rate hikes for now, with analysts at Standard Chartered stating their base case remains that the RBA will not raise rates again in the near future.
However, this could be overly optimistic, as there is a possibility of another rate hike in the fourth quarter if the central bank remains unconvinced that demand is slowing sufficiently. Additionally, the weaker Japanese Yen (JPY) may help to temper the AUD/JPY's losses, as concerns about Japan's deteriorating fiscal situation dampen market confidence.
Despite this, the lack of a clear funding mechanism for Japan's proposed relief package remains a significant concern, as it undermines the Japanese Yen's prospects. The AUD was also the strongest against the Swiss Franc, indicating a generally weaker currency market.
Written by urgent.news from FXStreet's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
