Australian Dollar flattens against Japanese Yen after Tokyo CPI data

The Australian Dollar steadied near 109.50 against the Japanese Yen during European trading on Friday, after initially recovering from earlier losses. The AUD/JPY pair rallied as the Japanese Yen failed to maintain its early gains following the release of the Tokyo Consumer Price Index (CPI) data for September. The CPI report indicated a notable year-on-year increase of 2.7% for Tokyo CPI, excluding fresh food, compared to 1.8% in August.

This data was considered hotter than the projected 2%. Furthermore, the YoY inflation rate for Tokyo CPI, excluding food and energy, accelerated to 3% from 2%. Such unexpectedly high inflation could potentially spur hawkish interest rate expectations from the Bank of Japan (BoJ). The BoJ's Summary of Opinions (SoP) from their September meeting suggested that several policymakers advocated for further interest rate hikes.

Nonetheless, the Cabinet Office's representatives at the BoJ board urged the central bank to reevaluate its monetary policy targets. Investors continue to await cues on whether the Reserve Bank of Australia (RBA) will raise interest rates further this year after a series of four 25 bps hikes, lifting the Official Cash Rate (OCR) to 4.6%.