AUD/JPY has retreated from its recent gains, trading around 98.10 during the European trading session on Monday.
The Japanese Yen (JPY) has strengthened against the Australian Dollar (AUD) following the release of upbeat Machinery Orders data from Japan, which has put pressure on the AUD/JPY pair. Japanese Finance Minister Shunichi Suzuki‘s comments on the Bank of Japan’s (BoJ) role in monetary policy have also contributed to the yen’s strength.
Japan’s Machinery Orders (MoM) for January showed a 2.7% increase, surpassing expectations of 2.5% and recovering from the previous month’s decline of 4.9%.
However, on a year-over-year basis, the data indicated a decline, albeit less severe than expected, with a reading of -0.7% compared to the anticipated -1.4% and the previous -5.0%. These figures suggest a positive outlook for business confidence in Japan’s manufacturing sector.
Meanwhile, the Australian Dollar has found some support from the higher S&P/ASX 200 index, which reached a record high on Monday.
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The rally was driven by increased mining stocks, supported by stronger metals prices. This positive market sentiment could further boost the Aussie Dollar and provide some support for the AUD/JPY cross. Investors are anticipating that the Reserve Bank of Australia (RBA) will maintain its current monetary policy stance throughout 2024.
Westpac has expressed optimism about the Australian economy, citing low unemployment and healthy corporate sector balance sheets. However, the bank expects the RBA to take a less restrictive approach in 2025.
In her recent address to the Australian parliament’s Senate Economics Legislation Committee, Reserve Bank of Australia Governor Michele Bullock acknowledged the global economy’s better-than-expected performance.
She noted previous concerns about potential economic downturns but expressed confidence that the economy is currently well-positioned to manage inflation effectively.