AUD/JPY in the early Asian hours on Tuesday floated near 103.20 levels, after the Reserve Bank of Australia (RBA) kept its Official Cash Rate at 3.6%. The cut had been widely anticipated by markets; however, the more dovish tone from officials helped keep mild pressure on the Aussie, dragging it through 103.50.
RBA Cautious on Inflation Outlook
In its statement, the Australian central bank indicated that recent inflation pressures may also partially stem from temporary factors, though broadening price growth still needs to be closely watched. And policymakers said they will remain cautious and monitor the economic outlook as new data is released. The decision reinforced perceptions that the RBA is set to stay on the sidelines for now, keeping a lid on AUD gains across the board.
Worries Over Earthquakes May Affect BoJ Outlook
In the meantime, investors are also keeping an eye on Japan after Learning of a powerful earthquake. Analysts said that, depending on the extent of the damage the world’s third-largest economy sustained, the Bank of Japan (BoJ) could postpone a widely expected rate hike next week. The bank’s forthcoming meeting, on December 18–19, is now the subject of extra uncertainty, which could in turn weigh on the Yen in the sessions ahead.
Also in the market spotlight will be any comments from BoJ Governor Kazuo Ueda later in the day, which may provide clues on whether plans for policy normalization will proceed or be put on hold until further notice. AUD/JPY is under mild selling pressure for now; geopolitical and central bank expectations are expected to influence short-term movements. For now, the Aussie dollar remains in demand as the Yen takes lower ground on risk sentiment.
