Bias: bullish-to-range-bound, AUD/JPY sits above the 90-day average and near the upper end of the 3-month range, suggesting limited upside before a potential pause.
Key drivers:
- Rate gap: The RBA has signaled possible rate hikes in 2026, while the BoJ has tightened, keeping the gap in play.
- Risk/commodities: Oil sits above its longer-term average with notable volatility, a factor that supports AUD through commodity links while JPY can strengthen when risk dips.
- Macro: China’s uneven rebound dampens demand for Australian exports, weighing on the AUD.
Range: AUD/JPY is likely to drift within the recent range, holding near the high end unless fresh data shifts the balance.
What could change it:
- Upside risk: stronger Australian inflation data or a clearer RBA plan to hike supports the AUD through higher rate expectations.
- Downside risk: earlier BoJ tightening or intervention lifting the yen, or renewed China weakness reducing commodity demand.