The Australian dollar traded near 110.90 yen Wednesday, with an Australian inflation warning and expectations of another Japanese rate increase putting the central banks’ next decisions in focus.
FXStreet put AUD/JPY at about 110.90 in a report published at 1:02 a.m. ET (05:02 UTC). Its summary gave a separate approximate reading near 110.85.
Reserve Bank of Australia (RBA) Deputy Governor Andrew Hauser said the inflation outlook had deteriorated since the bank’s August projections. Speaking at a Sydney conference, he pointed to oil costs linked to the Middle East conflict, demand related to artificial intelligence and pressure on Australia’s capacity to supply goods and services.
Hauser said tighter policy could weaken economic activity and employment, while delay could allow inflation to become entrenched and make it more costly to address. He said persistent inflation weighs particularly heavily on low-income renters, while higher interest rates strain mortgage holders.
Reuters reported a 0.2% gain for the Australian dollar against the U.S. dollar after Hauser’s remarks. It was worth $0.70155 at 1:25 a.m. ET (05:25 UTC), having earlier reached $0.70289, its highest level since Sept. 29, Reuters said.
The Bank of Japan (BOJ) set its overnight-rate guideline at around 1.25% on Sept. 18, effective Sept. 24. It said future rate changes would depend on its assessment of growth, inflation and financial conditions. Reuters reported that BOJ Deputy Governor Ryozo Himino told lawmakers underlying inflation was nearing the bank’s 2% target, while financial conditions remained accommodative.
In a Reuters poll conducted Oct. 13-19, 54 of 78 economists expected the BOJ to raise its rate to 1.50% in the fourth quarter. About 80% of respondents who named a month chose December; 2% selected the Oct. 29-30 meeting. The BOJ has not announced a December increase.
Australia’s next consumer price report is due Oct. 28. The BOJ meets Oct. 29-30, and the RBA’s next rate announcement is scheduled for Nov. 3.
