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AUD/JPY falls after softer Australian inflation fuels rate-hike doubts

AUD/JPY was around 113.6, down 0.6% on the day, after June CPI undershot expectations and trimmed-mean inflation eased to 3.6% year over year.

Reported · Written up by our desk · Major Pairs

Australian inflation data came in weaker than expected, pushing the Australian dollar lower and dragging AUD/JPY to around 113.60 on Wednesday, down 0.6% on the day, according to FXStreet.

Australia’s CPI rose 3.8% year over year in June, down from 4.0% in May and below the 4.0% market consensus, while the monthly CPI fell 0.1% for a second straight month.

FXStreet also noted that the RBA’s preferred trimmed mean inflation measure increased 3.6% year over year, reinforcing expectations that the Reserve Bank of Australia could keep interest rates unchanged and that investors have scaled back bets on additional hikes this year.

Meanwhile, demand for the Japanese yen has increased amid speculation that Japanese authorities may intervene to support the currency, adding further pressure on AUD/JPY, though the large interest-rate gap between Japan and Australia continues to cap the yen’s upside as markets look ahead to a Bank of Japan policy decision scheduled for Friday.

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