AUD/JPY held steady on Wednesday’s Asian session, hovering near 0.6920 after six consecutive days of declines. The pair showed limited movement as the Australian Dollar exhibited only modest fluctuations following the latest CPI publication.
Inflation in Australia decelerated more sharply than expected in May, providing policymakers with some breathing room. Data from the Australian Bureau of Statistics showed the annual CPI increase easing to 4.0% year‑on‑year, down from 4.2% the month before and below the 4.4% forecast. On a monthly basis, prices slipped 0.7%, reversing a 0.4% rise in the previous month and exceeding the anticipated 0.3% decline. The RBA’s preferred Trimmed Mean CPI rose 0.4% month‑over‑month, translating to a 3.6% annual gain.
In Japan, pressure is mounting for a tighter monetary stance amid growing warnings about a weakening yen. Chief Cabinet Secretary Minoru Kihara affirmed that the government will intervene against excessive currency swings if needed. This messaging was reinforced by a high‑level discussion between Finance Minister Satsuki Katayama and U.S. Treasury Secretary Scott Bessent, heightening market expectations of potential yen‑buying interventions.
The Bank of Japan’s June policy summary indicated that most board members favoured raising the policy rate, citing expanding inflation risks and a CPI that is steadily moving toward the 2% target.
Consequently, the upside potential for the AUD/JPY pair is tightly constrained. Cooling Australian inflation reduces the prospect of further RBA tightening, while heightened concerns over possible Japanese currency intervention have compelled traders to exercise extreme caution.
Economic Indicator
Consumer Price Index (YoY)
The Consumer Price Index (CPI), published monthly by the Australian Bureau of Statistics, tracks price movements for a broad basket of goods and services purchased by households. Serving as the headline gauge of inflation, it reflects the year‑over‑year change in reference‑month prices. Higher CPI readings tend to support the Australian Dollar, whereas lower readings are bearish.
