top of page
  • Writer's pictureSieracki Milosz

AUD/JPY Exchange Rate: BoJ's Hawkish Comments and China's Demand Impact

AUD/JPY: How BoJ's Hawkish Comments and China's Demand Affect the Exchange Rate.

australian dollars japan yens boj rba china market charts

In the ever-fluctuating world of forex trading, staying informed about the latest developments and their potential impacts on currency pairs is crucial. One such development that recently influenced the AUD/JPY exchange rate is the hawkish comments made by Bank of Japan (BoJ) Governor Kazuo Ueda. In this article, we'll delve into the details of how Ueda's statements and China's demand dynamics are affecting the AUD/JPY pair.

1. Hawkish Comments by BoJ Governor Kazuo Ueda

The AUD/JPY pair has been on traders' radars due to the hawkish comments made by BoJ Governor Kazuo Ueda. These comments sent ripples through the forex market as Ueda hinted at the possibility of future interest rate hikes by the central bank. This, in turn, exerted downward pressure on the AUD/JPY exchange rate.

2. The 2% Inflation Target

Ueda's statements were underpinned by the central bank's commitment to achieving a 2% inflation target. The Bank of Japan might consider ending its negative interest rate policy when it sees this inflation target on the horizon, as reported by the Yomiuri newspaper. This policy shift, if it materializes, could further impact the exchange rate.

3. RBA's Recent Decision

On the other side of the equation, the Reserve Bank of Australia (RBA) made headlines by maintaining the Official Cash Rate (OCR) at 4.10% last week. The RBA's decision raised questions about the central bank's strategy amidst the changing global economic landscape. This move allowed the RBA more time to assess the impact of the recent rate hike and to evaluate the economic outlook.

4. RBA Governor Philip Lowe's Insights

RBA Governor Philip Lowe, whose term is set to conclude on September 18, provided insights into the central bank's thought process. He emphasized that he is closely monitoring the potential for wages and profits to surpass levels that are consistent with achieving the inflation target by late 2025. Additionally, Lowe noted that the unemployment rate can remain at levels not seen in nearly 40 years, and wage growth remains robust.

5. Concerns About Weak Demand in China

Investors are expressing concerns about the weak demand and the potential for deflation in China. This is particularly noteworthy given the close trade ties between Australia and China. The Chinese government, however, has denied that the country has officially entered a period of deflation.

6. Consumer Price Index (CPI) Data

Regarding recent economic data from China, the Consumer Price Index (CPI) data in August showed a year-on-year increase of 0.1%. While this represented an improvement compared to the previous month's figure of -0.3%, it fell short of market expectations, which had anticipated a 0.2% increase in consumer prices. This data suggests that while there was a slight improvement, inflation remains subdued.

7. Implications for AUD/JPY

The renewed concerns about a Chinese economic slowdown could potentially lead to selling pressure on the Australian Dollar (AUD). This is significant because the AUD is often considered a proxy for the Chinese economy due to their close trade ties. As a result, this may create headwinds for the AUD/JPY pair.

8. Traders' Expectations

Traders of the AUD/JPY cross pair are expected to gain a clearer insight into China's economic conditions during the week. This will include a better understanding of the obstacles that authorities face in their efforts to implement necessary monetary and fiscal policies aimed at sustaining Beijing's goal of achieving 5% GDP growth for the current year.

aud jpy 11-09-2023 TradingView BlackBull Markets

In conclusion, the AUD/JPY exchange rate is influenced by a complex interplay of factors, including central bank policies, economic data, and global demand dynamics. Traders should keep a close eye on developments in Japan, Australia, and China, as these will continue to shape the trajectory of this currency pair.


1. What is the AUD/JPY exchange rate?

The AUD/JPY exchange rate represents the value of one Australian Dollar (AUD) in terms of Japanese Yen (JPY). It is a widely traded currency pair in the forex market.

2. Why did BoJ Governor Kazuo Ueda's comments affect the exchange rate?

Ueda's hawkish comments suggested the possibility of future interest rate hikes, which can impact currency valuations. Traders reacted to this news, influencing the AUD/JPY pair.

3. How does China's demand affect the Australian Dollar (AUD)?

Australia and China have strong trade ties, making the AUD sensitive to changes in Chinese demand and economic conditions. Weak demand in China can put downward pressure on the AUD.

4. What is the 2% inflation target mentioned in the article?

The 2% inflation target refers to the goal set by central banks, including the Bank of Japan, to achieve a stable inflation rate of 2%. It is a common target in monetary policy to maintain price stability.

5. What are the potential implications of a Chinese economic slowdown on the AUD/JPY pair?

A Chinese economic slowdown can lead to reduced demand for Australian exports, impacting the Australian Dollar (AUD). This can, in turn, affect the AUD/JPY exchange rate.

BlackBull Markets is an award-winning, multi-regulated financial service provider offering multi-asset access to 26,000+ tradable instruments (shares, options, futures, derivatives, cryptocurrencies, and market research) on MetaTrader 4, MetaTrader 5, WebTrader, TradingView, and BlackBull Shares

Trade with an award-winning broker

Start trading in less than 5 minutes

0 views0 comments
bottom of page