Ella 
This week’s AUD/JPY cross has rebounded strongly from around the psychological 90.00 mark, the lowest level since May 2023, and strengthened for a second day in a row on Wednesday. The Australian dollar/yen maintained its strong momentum during the session, with the Asian market rising to a new high this week – near the 97.00 integer mark.
The Japanese yen (JPY) came under huge selling pressure after Bank of Japan (BOJ) Deputy Governor Shinichi Uchida made dovish remarks, stating that the central bank would not raise interest rates when the market is unstable. This follows signs of stabilization in global financial markets, which is seen as another factor undermining safe-haven demand for the yen and providing some support for the AUD/JPY cross.
The Australian dollar (AUD) continues to receive support from the hawkish outlook released by the Reserve Bank of Australia (RBA) on Tuesday. The Reserve Bank of Australia stated that it will continue to adopt restrictive policies while inflation remains severe. Meanwhile, China’s trade balance data released on Wednesday showed an unexpected surge in imports in July, with an annual growth rate of 7.2%, indicating that domestic demand remains resilient.
However, investors remain concerned about signs of cooling growth in China, the world’s second-largest economy. In addition, geopolitical risks arising from ongoing conflicts in the Middle East will also dampen market optimism. This in turn will provide some support for the yen and limit gains in the AUD/JPY cross, so investors will need to be cautious before placing positions for further AUD/JPY gains.
