- AUD/JPY depreciates as a Reuters poll indicated that 56% of economists anticipate a BoJ rate hike in December.
- Governor Kazuo Ueda indicated the possibility of further rate hikes, highlighting the Yen’s impact on economic and price stability.
- The Australian Dollar loses ground following the release of mixed Judo Bank PMI data on Friday.
AUD/JPY continues its decline, approaching 100.30 during Asian trading hours on Friday. This drop is likely due to a stronger Japanese Yen (JPY), following insights from a Reuters poll on expectations for the Bank of Japan (BoJ). According to the survey, 56% of economists anticipate that the BoJ will raise interest rates at its December meeting, driven by the depreciation of the JPY and improving economic conditions.
Furthermore, 90% of economists expect that the BoJ increase rates to 0.50% by the end of March 2025. The median forecast for the terminal rate is 1.00%, with estimates ranging from 0.50% to 2.50%. Furthermore, 96% of economists believe that a possible return of Donald Trump to the US presidency could lead the BoJ to raise rates further, as its policies are expected to increase global inflation.
Governor Kazuo Ueda highlighted the need to address the Yen’s impact on economic and price stability, suggesting the possibility of further rate hikes. Additionally, Prime Minister Shigeru Ishiba’s administration is considering a $90 billion stimulus package aimed at easing the burden of rising prices on households.
Recent data indicated that Japan’s National Consumer Price Index (CPI) slowed to a nine-month low of 2.3% year-on-year in October. Similarly, the annual core CPI, which excludes fresh food, also fell to a six-month low of 2.3%, slightly above the 2.2% forecast.
Additionally, Japan’s Jibun Bank Services Purchasing Managers’ Index (PMI) rose to 50.2 in November, from 49.7 in October, which had marked the lowest level in four months. However, the Manufacturing PMI unexpectedly fell to 49.0 in November, the lowest reading since March, from 49.2 in October, below market expectations of 49.5.
The Australian Dollar (AUD) weakens following the release of mixed PMI data from Australia’s Judo Bank on Friday. However, the AUD received support from a hawkish outlook from the Reserve Bank of Australia (RBA) on future interest rate decisions, which could help limit the decline in the AUD/JPY cross.
Australia’s Judo Bank Manufacturing PMI rose to 49.4 in November from 47.3 in October, marking its 10th straight month of contraction, although the decline slowed to its weakest pace in six months. Meanwhile, the Services PMI fell to 49.6 from 51.0, signaling the first contraction in services activity in ten months.
