The AUD/JPY pair edged higher to around 95.50 during Tuesday’s Asian session, supported by a surprise move from the Reserve Bank of Australia (RBA), which left its Official Cash Rate (OCR) unchanged at 3.85%. This decision defied broad market expectations of a 25 basis point cut to 3.60%.
In its policy statement, the RBA emphasized a data-dependent approach going forward, stating that the economic outlook remains uncertain and future policy decisions will hinge on evolving risks and upcoming data. Investors will be closely watching the RBA Governor’s press conference later in the day for further policy signals. A hawkish tone may lift the Australian Dollar further, while dovish language could reverse the gains.
Trump Threatens Tariffs on Japan, JPY Pressured
On the Japanese side, geopolitical tensions resurfaced after U.S. President Donald Trump announced plans to impose 25% tariffs on Japanese imports, set to take effect on August 1. Trump stated that retaliatory measures would be met with even steeper tariffs but hinted at possible exemptions for nations willing to ease trade restrictions.
Japanese Prime Minister Shigeru Ishiba responded on Tuesday, saying talks with the U.S. have stalled due to Japan’s need to protect key domestic interests. Meanwhile, weak wage growth data out of Japan continues to pose challenges for the Bank of Japan (BoJ), potentially delaying any steps toward policy normalization — a factor that could weigh further on the Japanese Yen.
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