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Aussie-Yen set to recover toward 35-year highs as Japan intervention fades

After Japan’s intervention, Aussie-yen rebounded toward 111.5, and hedge demand for a drop over the next month has fallen, signaling traders are easing bearish bets ahead of the RBA’s Aug. 11 decision.

Reported · Written up by our desk · Major Pairs

LiveMint Markets, citing analysts, said the Australian dollar is expected to climb back toward a 35-year high against the yen as the effect of Tokyo’s currency intervention fades and the Reserve Bank of Australia keeps a hawkish outlook.

The pair dropped more than 4% toward the 109 level after the intervention and closed around 111.52 last week, as strategists expect rate differentials to start mattering more than Japan’s short-term market smoothing efforts.

ANZ’s Mahjabeen Zaman said much of the yen leg shift is already done and that further Japanese intervention may be less likely given signaling from the US about possible coordinated action.

Separately, AT Global Markets Australia expects Aussie-yen to return toward late-July levels, with the next catalyst the RBA’s Aug. 11 policy decision, where interest rates are widely expected to be held but swap markets still price roughly a 50% chance of another quarter-point hike by year-end.

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