- AUD/JPY loses ground as the Australian Dollar declines after the release of the RBA Meeting Minutes.
- RBA Assistant Governor Sarah Hunter noted that increased tariff uncertainty could negatively impact investment, output, and employment in Australia.
- BoJ Governor Kazuo Ueda signaled that interest rates may rise if economic and price data move as expected.
AUD/JPY depreciated by approximately 0.50%, trading around 92.20 during the European hours on Tuesday. The currency cross loses ground as the Australian Dollar (AUD) falls following the release of the Reserve Bank of Australia’s (RBA) Meeting Minutes.
RBA Minutes of its May monetary policy meeting indicated that the board viewed the case for a 25 basis point cut as a stronger one, preferring a policy to be cautious and predictable. The board members emphasized that US trade policy posed a significant and adverse impact on the global outlook, but had not yet affected the Australian economy, however, they did not reason that a 50 bps was needed.
Reserve Bank of Australia (RBA) Assistant Governor Sarah Hunter warned on Tuesday that “higher US tariffs will put a drag on the global economy.” Hunter also noted that higher uncertainty could dampen investment, output, and employment in Australia. However, she added that Australia’s exporters are relatively well-placed to weather the storm and assumes that Chinese authorities will support their economy through fiscal stimulus.
The downside of the AUD/JPY cross could be restrained as the Japanese Yen (JPY) remains softer. However, the JPY may regain its ground amid growing odds of the Bank of Japan’s (BoJ) rate hikes. The BoJ Governor Kazuo Ueda expressed willingness to increase interest rates if economic and price data move in line with forecasts.
Ueda also highlighted the importance that Japan’s economy is undergoing a moderate recovery despite some weakness. He noted that corporate profits are improving, with business sentiment solid. “Will review bond taper plans at the next policy meeting, taking into account opinions of bond market participants.”
