AUD/JPY rises 0.70% on Monday and trades around 112.25 at the time of writing.
The pair benefits from broad weakness in the Japanese Yen (JPY), while the Australian Dollar (AUD) holds firm ahead of the Reserve Bank of Australia (RBA) monetary policy decision on Tuesday
The Japanese Yen faces renewed selling pressure after Japan’s current account unexpectedly swung into a ¥92.3B deficit in June, compared with expectations for a ¥1,512B surplus. Japan’s Ministry of Finance (MoF) attributed the increase in outflows partly to higher Oil prices and significant dividend payments to foreign investors. Japan’s fiscal outlook also weighs on the currency.
With public debt exceeding 200% of Gross Domestic Product (GDP), Prime Minister Sanae Takaichi’s expansionary policies and proposed tax cuts are fueling concerns about long-term debt sustainability. These structural headwinds have limited the lasting impact of recent interventions aimed at supporting the JPY. Meanwhile, the Bank of Japan (BoJ) maintains a tightening bias.