Ella 
AUD/JPY fell lower on Monday after lower-than-expected data on Australian retail sales, a leading indicator directly linked to the outlook for inflation and growth, could influence the Reserve Bank of Australia’s hawkish interest rate trajectory. However, the Australian dollar strengthened as higher-than-expected inflation in Australia increased expectations that the Reserve Bank of Australia may not cut interest rates soon.
Australia’s largest mortgage lender, Commonwealth Bank, has revised its forecast for when the Reserve Bank of Australia will start cutting interest rates. The Commonwealth Bank of Australia now expects just one interest rate cut in November, the Financial Review reports. The Reserve Bank of Australia is likely to cut the cash rate from 4.35% to 4.1% this year and more sharply to 3.1% by 2025, Commonwealth Bank of Australia predicts. Gareth Aird, head of Australian economics at the Commonwealth Bank of Australia, said the Reserve Bank of Australia is expected to cut interest rates once every quarter by 2025, with each cut by 25 basis points.
In Japan, according to Reuters, market participants will be wary of possible Japanese intervention on Tuesday following reports on Monday that Tokyo intervened in the currency market and pushed up the yen (JPY). Japan’s domestic retail trade data released on Tuesday was lower than expected, supporting the Bank of Japan’s dovish stance. In addition, the expectation of continued significant interest rate differentials between Japan and other countries suggests that the yen is biased towards further depreciation.
