The AUD/JPY currency pair remains positive despite the Bank of Japan's (BoJ) interest rate hike and the potential for the Japanese Yen (JPY) to strengthen. While the BoJ raised its short-term rate target, US President Donald Trump's reluctance to impose tariffs on China could offer support to the Australian Dollar.
AUD/JPY is trading positively around 98.20 in Friday's Asian session, showing a 0.22% increase on the day. The Bank of Japan (BoJ) delivered an anticipated interest rate hike, raising the rate to 0.50% at its January meeting. US President Donald Trump expressed his preference for avoiding tariffs against China , characterizing them as a powerful tool. The AUD/JPY currency pair remains resilient near 98.20 during Asian trading hours on Friday.
However, the potential upward movement of the pair might be restricted due to the strengthening Japanese Yen (JPY) following the Bank of Japan's (BoJ) interest rate decision. As widely predicted, the BoJ raised the short-term rate target by 25 basis points (bps), moving it from 0.15% - 0.25% to 0.40% - 0.50% at its January meeting on Friday. This marks the highest interest rate level for the Japanese central bank since 2008, following three consecutive meetings where the rate remained unchanged. The JPY witnessed a reduction in losses immediately after the BoJ's rate decision.Data released by the Japan Statistics Bureau on Friday revealed that the country's National Consumer Price Index (CPI) rose by 3.6% year-on-year (YoY) in December, compared to 2.9% in the previous reading. Furthermore, the National CPI excluding Fresh food stood at 3.0% YoY in December, matching the market consensus of 3.0% and exceeding the previous reading of 2.7%. Finally, CPI excluding Fresh Food and Energy increased by 2.4% YoY in December, aligning with the previous reading of 2.4% (revised from 2.7%). Conversely, US President Donald Trump stated on Friday that he would prefer to avoid imposing tariffs on China but acknowledged the significant power of tariffs. This positive development could provide some support to the China-proxy Aussie, considering China's status as a major trading partner for Australia.
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