China’s unchanged benchmark rates support the Australian Dollar, offsetting prior losses against the Japanese Yen in early Asian trade.
The AUD/JPY cross traded around 113.30 in early Asian hours, recovering from minor losses as the Australian Dollar strengthened. The People’s Bank of China kept its one-year and five-year Loan Prime Rates at 3.00% and 3.50%, respectively, reinforcing stability in China’s economy and supporting the AUD.
China’s monetary policy decision bolsters the AUD due to strong trade ties between the two nations. Domestically, the Reserve Bank of Australia’s recent hold on rates, coupled with hawkish inflation warnings from Governor Michele Bullock, adds underlying support. Markets now view further RBA hikes as unlikely unless Q2 inflation data surprises.
Upside for AUD/JPY may be limited if the Japanese Yen gains traction amid potential forex intervention risks. Traders are eyeing Tuesday’s Japanese PMI data and Wednesday’s inflation figures for further direction.