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AUD/JPY rises as hotter Australian CPI lifts RBA hike expectations

Australian July CPI came in at 3.5% year over year, while trimmed mean CPI was 3.6%, both cited as firmer than forecasts.

Reported · Written up by our desk · Major Pairs

The Australian dollar strengthened against the Japanese yen, with AUD/JPY up 0.13% to around 114.30 during European trading, as traders increased Reserve Bank of Australia interest rate hike expectations.

FXStreet attributes the move to hotter-than-expected Australian CPI for July, where headline CPI rose 3.5% year over year in July versus 3.8% in June, and trimmed mean CPI came in at 3.6% versus 3.5% expected.

The outlet also points to RBA signals from the July meeting minutes, which showed some board members viewing a hike as “quite possible” if upside inflation risks develop.

On the yen side, FXStreet notes expectations for a Bank of Japan rate increase in September, while the pair trades near 114.18 and holds a bullish near term bias, supported by technical levels including an above-20 period EMA around 113.09 and a cited supply zone at 114.66 to 114.93.

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