Traders weigh potential Japanese FX intervention and BoJ rate hike risks amid rising inflation concerns.
The AUD/JPY pair fell to 112.35 in early European trading, extending losses as the Japanese Yen strengthened. Market focus remains on potential currency intervention by Japanese authorities, following rare coordinated action with the U.S. last week.
The Bank of Japan signaled growing inflation risks in its July meeting summary, with one board member suggesting faster rate hikes. The BoJ may consider another increase in September after its June hike, according to reports. Meanwhile, Goldman Sachs noted that intervention effects are temporary, offering only short-term relief.
DBS Group Research highlighted the unusual nature of recent U.S.-Japan FX coordination, comparing it to the 2011 earthquake response. The move underscores heightened concerns over Yen weakness and its economic impact.