AUD\/JPY moved back above the mid-108.00s in Asian trading on Monday, ending a four-day slide after hitting a nearly two-week low on Friday. The move followed weaker Japanese data that weighed on the Yen.<\/p>\n
Japan\u2019s Cabinet Office said GDP rose 0.1% in Q4 2025, after a 0.7% fall in the prior quarter. The result missed forecasts and reduced expectations for an early Bank of Japan rate rise, which weakened the JPY.<\/p>\n
The Australian Dollar stayed supported after the Reserve Bank of Australia maintained a hawkish stance. The RBA Governor said rates could rise again if inflation becomes entrenched, while an RBA official said inflation is expected to remain above the 2%\u20133% target for some time and that the labour market has stabilised.<\/p>\n
Expectations of further Chinese fiscal and monetary support also helped demand for the AUD. Limits to further AUD\/JPY gains included talk of possible Japanese action to slow JPY weakness and expectations for a Bank of Japan rate rise later this year.<\/p>\n
We are seeing a clear policy split between Australia and Japan, creating a prime opportunity in the AUD\/JPY cross. Japan’s disappointing 0.1% GDP growth for the final quarter of 2025 has pushed back expectations for any immediate Bank of Japan rate hike. This situation makes holding the higher-yielding Aussie against the Yen increasingly attractive.<\/p>\n
The Reserve Bank of Australia is maintaining its firm stance, especially after we saw fourth-quarter inflation last year come in at 3.8%, still well above their target band. This hawkishness supports the Aussie dollar’s strength. For traders, this reinforces the case for buying AUD\/JPY call options to profit from expected gains while capping downside risk.<\/p>\n
While Japan’s economy is struggling, we note that core inflation is still running at 2.5%, keeping the possibility of a future rate hike on the table for later this year. In the background, continued hopes for Chinese economic support, especially after their central bank cut a key lending rate last month, are providing another lift for the Australian dollar. This mix of factors favors a continued, albeit potentially bumpy, rise for the pair.<\/p>\n
We must remain cautious about potential intervention from Japanese authorities to strengthen the Yen, a strategy they used back in 2022 when USD\/JPY breached key levels. The current AUD\/JPY rate above 108.00 is entering a territory that will make officials uncomfortable, with levels approaching 110 likely to trigger a response. Therefore, using options to define risk or setting tight stop-loss orders on futures positions is a prudent approach in the coming weeks.<\/p>\n
Create your live VT Markets account<\/a>\u00a0and\u00a0start trading<\/a>\u00a0now. <\/b><\/p>\n","protected":false},"excerpt":{"rendered":" AUD\/JPY rebounded above 108.50 as weak Japan GDP hit Yen; hawkish RBA, China support buoyed Aussie.<\/p>\n","protected":false},"author":62,"featured_media":17044,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[59],"tags":[],"class_list":["post-41946","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-live-updates"],"acf":{"acf_article_selection_author":null},"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/41946","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/users\/62"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/comments?post=41946"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/41946\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media\/17044"}],"wp:attachment":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media?parent=41946"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/categories?post=41946"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/tags?post=41946"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}