Soft June CPI figures reduce bets on an RBA rate hike, pressuring the Australian Dollar against the Yen.
The AUD/JPY pair fell to a one-week low near 113.60, extending losses after Australia’s June Consumer Price Index (CPI) rose 3.8% year-over-year, below May’s 4% and consensus estimates. The monthly CPI also declined by 0.1%, missing forecasts for a second consecutive month.
The weaker-than-expected inflation data led traders to scale back expectations for a near-term Reserve Bank of Australia (RBA) rate hike, weighing on the AUD. Meanwhile, the Japanese Yen found support amid speculation of potential intervention by authorities to stabilize the currency.
Despite the decline, the wide interest rate gap between Japan and Australia limited further losses for the pair. Geopolitical risks in the Middle East also tempered aggressive positioning, leaving traders cautious about declaring a near-term top for AUD/JPY.