Australian Dollar flattens against Japanese Yen after Tokyo CPI data
The Australian Dollar (AUD) turns flat at around 109.50 against the Japanese Yen (JPY) during the European trading session on Friday after recovering early losses. The cross rebounds as the Japanese Yen struggles to hold early gains despite the release of the hot Tokyo Consumer Price Index (CPI) data for September.
Earlier in the day, Statistics Bureau of Japan reported that Tokyo CPI ex. Fresh Food jumps to 2.7% Year-on-Year (YoY) from 1.8% in August. The inflation data was seen at 2.4%. Tokyo CPI ex. Food, Energy accelerates at a significant pace to 3% YoY from the previous reading of 2%.
Hotter-than-projected Tokyo inflation data will likely boost hawkish Bank of Japan (BoJ) interest rate expectations.
BoJ Summary of Opinions (SoP) of the September meeting released on Thursday also showed that several policymakers support more interest rate hikes. “One member said appropriate to keep raising rates in line with economy, price, financial developments,” BoJ SoP showed.
The SoP report also showed that a few officials argued in favor of accelerating the monetary-tightening cycle to contain inflationary pressures and show BoJ’s commitment to achieve price stability. “BoJ must act nimbly, show market determination to prevent inflation overshoot and consider impact on FX market,” another member said.
However, the comments from representatives of the Cabinet Office at the BoJ board appeared that they urged central bank to reassess their monetary policy targets. “Cabinet office rep says government expects central bank to uphold accountability, carefully assess cumulative impact of previous rate increases,” the report showed.
On the Australian Dollar front, investors seek fresh cues regarding whether the Reserve Bank of Australia (RBA) will interest rates further this year after delivering four hikes of 25 basis points (bps), pushing the Official Cash Rate (OCR) to 4.6%.
RBA Governor Michele Bullock said at the monetary policy press conference on Tuesday that the central bank won’t hesitate to raise rate further, if needed to bring inflation down.
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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