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In Asia on Wednesday, the Australian dollar/yen continued its gains for the third consecutive trading day, trading around 101.20. This upside in the AUD/JPY cross has been attributed to muted yen moves amid uncertainty over the timing of the next Bank of Japan (BoJ) interest rate hike.
On Tuesday, Japanese Finance Minister Katsunobu Kato stressed the need to stabilize currency behavior based on economic fundamentals, saying he must be more vigilant about exchange rate fluctuations. Kato reiterated that the Japanese Ministry of Finance will take necessary measures to deal with excessive exchange rate fluctuations.
The Australian dollar (AUD) held steady following an interest rate decision by Australia’s close trading partner China. The Monetary Policy Committee (MPC) of the People’s Bank of China (PBoC) decided to keep the benchmark interest rate unchanged at 3.1% in November.
Australian Finance Minister Jim Chalmers (Jim Chalmers) said after the economic minister’s statement on Wednesday that “the collapse of iron ore prices and the weakening labor market have affected government revenue.” Chalmers outlined Australia’s grim fiscal outlook, saying a weakening economy in major trading partner China and a slowdown in the job market were affecting the outlook.
The upside potential for the AUD/JPY fork may be limited as the risk asset AUD may face challenges as Ukraine deploys US-supplied ATACMS missiles in Russia, striking Russian territory for the first time, marking the 1,000th day of a significant escalation in the Russia-Ukraine conflict. However, market anxiety abated somewhat when Russian Foreign Minister Sergei Lavrov reiterated his assurance that the government would take all necessary measures to avoid a nuclear war.
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