Anna 
During Tuesday’s European session, the AUD/JPY pair continued its upward trajectory for the third consecutive session, hovering around 104.50. The appreciation of the AUD/JPY cross is primarily attributed to the softening of the Japanese Yen (JPY) following the release of the latest data by the Bank of Japan (BoJ) earlier in the day. Japan’s Weighted Median Inflation Index, a key indicator of the country’s inflation trend, rose by 1.1% in April, albeit at a slower pace compared to the 1.3% increase recorded in March.
However, the Japanese Yen found some support during the early Asian hours, bolstered by Japan’s better-than-expected Corporate Service Price Index (CSPI). The CSPI posted a year-over-year reading of 2.8% in April, surpassing market expectations of 2.3% and marking its highest rate of increase since March 2015.
In addition, Japan Finance Minister Shun’ichi Suzuki highlighted the importance of currency stability reflecting economic fundamentals. Suzuki emphasized close monitoring of foreign exchange (FX) movements but refrained from commenting on whether Japan has intervened in currency markets.
Meanwhile, the Australian Dollar (AUD) maintained its upward momentum despite softer Retail Sales data from Australia, which showed a modest increase of 0.1% in April, rebounding from the previous month’s 0.4% decline but falling short of market expectations of 0.2%.
Furthermore, the latest Reserve Bank of Australia (RBA) meeting minutes revealed the board’s struggle in forecasting future changes in the cash rate. The minutes acknowledged that recent data increases the likelihood of inflation persisting above the 2-3% target range for an extended period, suggesting a cautious approach to monetary policy.
