Ella 
During the Asian session on Thursday, the AUD/JPY cross traded near the 94.70 area, attracting some bargain-hunting buying and interrupting the slight pullback since the one-week high hit the previous day. However, AUD/JPY has difficulty continuing this momentum and has only strengthened slightly to around the 96.00 round mark.
The Australian dollar (AUD) strengthened following Reserve Bank of Australia Governor Bullock’s hawkish remarks. In a question-and-answer session earlier today, Bullock emphasized the need to remain vigilant about inflation risks and expressed a preference for raising interest rates if necessary. In addition, signs of stabilization in the stock market have also provided further support for the Australian dollar in venture capital.
However, investors remain concerned about a possible recession in the United States. This, combined with ongoing geopolitical risks from conflict in the Middle East and China’s economic woes, has prevented traders from making aggressive bullish bets on China’s proxy currency, the Australian dollar. On the other hand, the yen strengthened after a summary of opinions from the Bank of Japan’s (BoJ) July meeting showed that some members believed there was room for further interest rate hikes and policy normalization. This further prevented AUD/JPY from rising higher.
The mixed fundamental environment and the lack of strong follow-up buying require investors to proceed with caution before confirming that AUD/JPY has bottomed in the short term and setting up positions for further gains in AUD/JPY. Market focus now turns to China’s latest inflation data due to be released during the Asian session on Friday. This data will have a key impact on the Australian dollar and provide some clear momentum for the AUD/JPY cross.
