The AUD/JPY pair remained steady around 97.00 on Thursday, despite growing expectations of further rate hikes by the Bank of Japan (BoJ). Japan’s Producer Price Index (PPI) rose by 4.2% year-over-year in January, reaching its highest level since May 2023. This marks the 47th consecutive month of producer inflation and surpassed market expectations of 4.0%.
On a monthly basis, producer prices increased by 0.3%, matching estimates but slightly easing from December’s 0.4% growth. The stronger-than-expected PPI data reinforces the case for additional BoJ rate hikes, as it highlights expanding inflationary pressures in Japan. Recent wage growth figures have also supported this outlook.
aud/jpy stability amid economic pressures
However, the Australian Dollar (AUD) found some support as Australia’s Consumer Inflation Expectations climbed to 4.6% in February from 4.0% in January. This strength in the AUD may be capped by concerns over a potential global trade war.
Late Wednesday, the White House indicated that President Donald Trump could unveil his reciprocal tariff plan before meeting with Indian Prime Minister Narendra Modi, according to CNBC. Trump has recently signaled his intent to impose tariffs on all nations that levy import duties on U.S. goods. The AUD/JPY pair has registered gains over the previous three sessions, but market caution has increased following the news of Trump’s potential tariff plan.
The pair traded around 97.00 during Thursday’s Asian hours, holding its ground despite the rising hawkish tone surrounding the BoJ’s outlook. As inflationary pressures continue to build in Japan and the BoJ considers further rate hikes, the AUD/JPY pair’s trajectory may be influenced by the interplay between domestic economic factors and global trade tensions.
