AUD/JPY rises on BoJ uncertainty and political shifts
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The AUD/JPY pair has risen above the 101.00 level due to ongoing uncertainty surrounding the Bank of Japan’s (BoJ) interest rate policy and recent political developments in Japan. While the Australian Dollar (AUD) is weighed down by China’s cautious stimulus package and fears of potential tariffs from the US, it is finding support from a weaker Yen (JPY) amid Japan’s economic and political concerns.
AUD/JPY Benefits from BoJ Rate Hike Uncertainty
AUD/JPY is showing strength, trading around 101.20 in early European hours, largely due to recent updates from the BoJ. The Bank’s October Summary of Opinions revealed a split among policymakers regarding the timing and necessity of rate hikes. While the central bank remains cautious, it has suggested a potential rate increase to 1% by the latter part of the 2025 fiscal year, creating an uncertain outlook that has pressured the Yen.
Some BoJ members voiced concerns about global volatility and the Yen’s depreciation, while others focused on stabilizing Japan's inflation and growth. This divided stance has led to market expectations of a delay in policy tightening, reducing demand for the Yen and favoring cross pairs like AUD/JPY.
Japanese Political Instability Adds Pressure to Yen
Political uncertainties in Japan are adding another layer of pressure on the Yen. Prime Minister Shigeru Ishiba’s Cabinet resigned on Monday, leading to an interim period until a new Cabinet is formed. The resignation and subsequent vote are expected to bring new leadership and possible policy shifts. The lack of a clear majority in the House of Representatives for the ruling coalition intensifies this uncertainty, further weakening the Yen.
Australian Dollar Gains despite China Concerns and Modest Stimulus
While the Australian Dollar (AUD) has faced recent challenges due to concerns over Trump’s potential tariffs on Chinese imports — which would impact Australia’s trade flows — it is finding support amid the weakened Yen. Furthermore, China’s latest stimulus measures, although falling short of expectations, provide some stability for the AUD. China announced a substantial 10 trillion Yuan debt package, focused on relieving local government debt burdens and addressing structural economic concerns. However, investors were disappointed by the absence of more direct economic stimulus, which would have directly boosted commodity demand. This tempered stimulus leaves Australia’s economic outlook uncertain as China is a key trading partner for the resource-rich nation.
Technical Analysis: AUD/JPY Eyes Resistance amid Bullish Momentum
From a technical perspective, AUD/JPY has regained the 101.00 level, and the short-term trend suggests a possible retest of resistance around 101.70-102.00. Should the pair break through this zone, it could target the 102.50 level, marking a key pivot point for further bullish moves. On the downside, the immediate support lies near 100.70, with further support around 100.20. The combination of Japanese economic and political concerns, alongside the uncertain outlook for Australia’s primary trading partner, China, suggests a cautiously bullish trend for AUD/JPY, at least in the short term.
AUD/JPY Benefits from BoJ Rate Hike Uncertainty
AUD/JPY is showing strength, trading around 101.20 in early European hours, largely due to recent updates from the BoJ. The Bank’s October Summary of Opinions revealed a split among policymakers regarding the timing and necessity of rate hikes. While the central bank remains cautious, it has suggested a potential rate increase to 1% by the latter part of the 2025 fiscal year, creating an uncertain outlook that has pressured the Yen.
Some BoJ members voiced concerns about global volatility and the Yen’s depreciation, while others focused on stabilizing Japan's inflation and growth. This divided stance has led to market expectations of a delay in policy tightening, reducing demand for the Yen and favoring cross pairs like AUD/JPY.
Japanese Political Instability Adds Pressure to Yen
Political uncertainties in Japan are adding another layer of pressure on the Yen. Prime Minister Shigeru Ishiba’s Cabinet resigned on Monday, leading to an interim period until a new Cabinet is formed. The resignation and subsequent vote are expected to bring new leadership and possible policy shifts. The lack of a clear majority in the House of Representatives for the ruling coalition intensifies this uncertainty, further weakening the Yen.
Australian Dollar Gains despite China Concerns and Modest Stimulus
While the Australian Dollar (AUD) has faced recent challenges due to concerns over Trump’s potential tariffs on Chinese imports — which would impact Australia’s trade flows — it is finding support amid the weakened Yen. Furthermore, China’s latest stimulus measures, although falling short of expectations, provide some stability for the AUD. China announced a substantial 10 trillion Yuan debt package, focused on relieving local government debt burdens and addressing structural economic concerns. However, investors were disappointed by the absence of more direct economic stimulus, which would have directly boosted commodity demand. This tempered stimulus leaves Australia’s economic outlook uncertain as China is a key trading partner for the resource-rich nation.
Technical Analysis: AUD/JPY Eyes Resistance amid Bullish Momentum
From a technical perspective, AUD/JPY has regained the 101.00 level, and the short-term trend suggests a possible retest of resistance around 101.70-102.00. Should the pair break through this zone, it could target the 102.50 level, marking a key pivot point for further bullish moves. On the downside, the immediate support lies near 100.70, with further support around 100.20. The combination of Japanese economic and political concerns, alongside the uncertain outlook for Australia’s primary trading partner, China, suggests a cautiously bullish trend for AUD/JPY, at least in the short term.