Anna 
During Monday’s European session, the AUD/JPY pair continued its upward trajectory, nearing the 99.90 mark. This upward movement can be attributed to the strengthening of the Australian Dollar (AUD), which found support from gains in the domestic equity market. The ASX 200 Index exhibited upward momentum, particularly driven by a surge in tech stocks, contributing to the positive sentiment surrounding the AUD.
Furthermore, Australia’s 10-year government bond yield saw an increase, climbing to nearly 4.1% and reaching over one-month highs. This rise followed a rally in US bond yields spurred by stronger-than-expected US jobs data. Speculation has arisen regarding the Federal Reserve’s stance on maintaining higher interest rates for an extended period, further bolstering the AUD.
Investor sentiment regarding the Reserve Bank of Australia (RBA) cutting interest rates in 2024 has shifted, with growing skepticism about the necessity for such action. This sentiment has been reinforced by more positive data emerging from the US, strengthening expectations of prolonged elevated borrowing costs in the world’s largest economy.
The Australian Dollar (AUD) faced downward pressure in the previous week following unchanged Final Retail Sales and downbeat Trade Balance data from Australia. However, market participants are closely monitoring copper and oil prices, as further appreciation in these commodities could potentially support the AUD, thereby underpinning the AUD/JPY cross.
Conversely, the Japanese Yen (JPY) continues to experience downward pressure as the Bank of Japan (BoJ) maintains a cautious stance towards further policy tightening. Additionally, reduced geopolitical tensions in the Middle East have dampened the appeal of the safe-haven JPY. Israel’s decision to withdraw additional troops from Southern Gaza, likely in response to mounting international pressure, has contributed to a relaxation of tensions.
Earlier on Monday, Bank of Japan (BoJ) Governor Kazuo Ueda expressed his aspiration to simplify and enhance the clarity of the central bank’s policy framework, provided economic conditions permitted. Governor Ueda made these remarks while reflecting on his tenure since assuming the post approximately a year ago.
