AUD\/JPY has risen to its highest level since 1990. The move has been linked to Australia being a net energy exporter and market pricing that the RBA could raise rates, potentially as soon as next week.<\/p>\n
The cross has also been supported by steady expectations for Bank of Japan policy. Current pricing suggests rate rises by several central banks, including the RBA, could be brought forward.<\/p>\n
The outlook includes risks from prolonged geopolitical tensions and higher market volatility. In risk-off conditions, carry trades can unwind and trigger sharp pullbacks.<\/p>\n
If the crisis lasts and more central banks adopt a hawkish stance due to inflation risks, the yen could gain. This could be driven by lower liquidity, weaker risk appetite, and domestic Japanese savings moving back home.<\/p>\n
Next week\u2019s policy meetings are expected to influence near-term direction for AUD\/JPY. Ongoing tensions could limit further gains from current levels.<\/p>\n
The AUD\/JPY is at its highest point in decades, driven by a widening policy gap. Recent data shows Australian inflation hit 3.8% in February, fueling bets on a rate hike from the RBA next week. Meanwhile, Japanese inflation dipped back to 1.9%, reinforcing the Bank of Japan’s dovish stance.<\/p>\n
Australia\u2019s position as a major energy exporter provides strong support for the AUD. Recent geopolitical flare-ups have pushed liquified natural gas futures up 8% this month, directly boosting the currency’s appeal. This energy story, combined with the market now pricing in an 80% chance of an RBA hike, is fueling the rally.<\/p>\n
However, we must be cautious as these same tensions increase market volatility. The VIX index has climbed over 15% in the past two weeks, a classic warning sign for risk assets. If this risk-off mood deepens, the Japanese Yen could strengthen as investors move capital back to safety.<\/p>\n
For derivative traders, this suggests a strategy of cautious optimism. While long calls could capture further upside from an RBA surprise, buying puts offers crucial protection against a sudden reversal. The elevated volatility makes options an effective tool for managing the risk of the carry trade unwinding.<\/p>\n
We only need to look back to the third quarter of 2025 for a reminder of how quickly things can change. A similar spike in global risk aversion saw the AUD\/JPY drop a sharp 5% in a matter of days. This highlights how carry trades can rapidly fizzle when fear takes over the market.<\/p>\n
Create your live VT Markets account<\/a>\u00a0and\u00a0start trading<\/a>\u00a0now. <\/b><\/p>\n","protected":false},"excerpt":{"rendered":" AUD\/JPY hits highest since 1990 on RBA hike bets; risks include geopolitics, volatility, yen strength.<\/p>\n","protected":false},"author":103,"featured_media":17039,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[59],"tags":[],"class_list":["post-51325","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\/51325","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\/103"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/comments?post=51325"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/51325\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media\/17039"}],"wp:attachment":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media?parent=51325"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/categories?post=51325"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/tags?post=51325"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}