The currency pair climbs to 113.35 amid optimism over a US-Iran agreement, ahead of key RBA and BoJ rate decisions.
The AUD/JPY cross advanced to 113.35 in early European trading on Monday, supported by reports of a US-Iran peace deal set to take effect Friday. The agreement, which includes lifting a US naval blockade on Iranian ports, has bolstered risk appetite, benefiting the Australian Dollar against the Japanese Yen.
Markets are now focused on Tuesday’s interest rate decisions from the Reserve Bank of Australia (RBA) and Bank of Japan (BoJ). The RBA is expected to hold rates steady for the first time this year, with traders watching for signals on future tightening. Meanwhile, the BoJ may raise its benchmark rate to the highest level since 1995, despite the absence of its governor.
Fading expectations of further RBA hikes could limit near-term gains for the Aussie, while a BoJ rate increase may strengthen the Yen. Economists in a Reuters poll forecast the BoJ to raise rates to 1.25% in Q4 following a June hike to 1.0%.