The Australian Dollar gains against the Yen after the Bank of Japan keeps rates steady, widening the interest rate gap.
The AUD/JPY cross climbed to near 113.00 during Friday’s Asian session, extending gains after the Bank of Japan (BoJ) left its short-term interest rate unchanged at 1.00%. The decision snapped a three-day losing streak for the pair, which had fallen to its lowest since April 7 below 111.00 earlier in the week.
The BoJ maintained its policy stance as expected but revised its fiscal 2026 GDP forecast to 0.6% from 0.5% while trimming core CPI estimates for the same period to 2.5% from 2.8%. The central bank also flagged Middle East tensions as a risk to economic stability, further pressuring the Yen.
Lower borrowing costs in Japan relative to Australia continue to support the JPY carry trade, bolstering the AUD/JPY cross. Despite China’s weaker-than-expected PMIs and suspected Japanese intervention to prop up the Yen, the pair remains on track for its first weekly loss in five weeks.