Ella 
On Tuesday, the AUD/JPY pair oscillated lower for the third day in a row, the ninth day in the previous ten trading days, and fell to its lowest level since June 17 in the Asian session. The latest AUD/JPY fell further below the 104.00 mark, and bears expect the AUD/JPY to continue its recent consolidation decline since the highest level since May 1991 reached earlier this month.
Against the backdrop of suspected intervention by Japanese authorities, expectations that the Bank of Japan (BoJ) may raise interest rates again at the upcoming policy meeting continue to support the yen. In addition, the uncertain political outlook in the United States also favors the yen’s relative safe-haven status and puts some downward pressure on the AUD/JPY cross. In addition, market concerns about the slowdown in China, the world’s second largest economy, seem to have put pressure on the Australian dollar (AUD) and prompted funds to flow to AUD/JPY.
Meanwhile, bulls also failed to get a respite from the unexpected interest rate cut by the People’s Bank of China (PBoC) on Monday. The People’s Bank of China cut the one-year loan prime rate (LPR), five-year loan prime rate and seven-day reverse repo rate by 10 basis points to 3.35%, 3.85% and 1.7%, respectively. This, along with expectations that US stocks may benefit from Trump’s policy preferences, still supports the market to maintain a general risk appetite. This may prevent further gains in the yen and provide some support to the risk asset Australian dollar.
In addition, market bets that the Reserve Bank of Australia may raise interest rates again, supported by an optimistic labor market report in June and rising inflation in May, may boost the Australian dollar. Therefore, investors need to be cautious before opening new bearish bets near the AUD/JPY cross. Investors now look forward to the release of the global purchasing managers’ index preliminary data on Wednesday, which will drive safe-haven demand for the yen. Apart from this, the maintenance of a broader risk sentiment in the market should also help generate short-term trading opportunities in the AUD/JPY.
