Forecasts for AUD to JPY
Amid the landscape of fluctuating interest rates and commodity prices, FX analysts are anticipating an uptick in the Australian dollar (AUD) leading into 2024. The Reserve Bank of Australia's (RBA) historically conservative approach to interest rate hikes in 2022 initially placed the AUD at a disadvantage when matched against majors like the USD, EUR, and GBP. However, looking forward, market view suggests that as the global economic scene evolves, with other countries potentially cutting rates while the RBA continues its tightening cycle, the gap in interest rate differentials will narrow. This anticipated shift is expected to bolster the value of the AUD, particularly as Australia's status as a major commodity exporter means that currency movements are often reflective of changes in commodity prices and global economic confidence. The Australian dollar's recent uptick towards US66¢, driven by speculation on interest rates peaking in the US concurrent with predicted RBA rate hikes, underscores this forecasted upward trend.
Japanese yen (JPY) projections are painting a different picture. Analysts from ING and Societe Generale are forecasting a decline in the USD/JPY pairing to levels around 130 and 125, respectively, by the end of 2024. Likewise, with the expectation of the Bank of Japan (BoJ) potentially shifting away from its long-standing loose monetary policy, TD Securities suggests an early 2024 level of 135 for USD/JPY. With FXStreet's commentary on potential support for the JPY in the latter half of 2024 depending on the US Federal Reserve's rate adjustments, it appears that JPY could see increasing valuation later in the forecast period. Considering that Japan imports virtually all of its oil, the recent decline in oil prices, with Brent Crude OIL/USD trading 5.3% below its 3-month average and exhibiting notable volatility, might contribute to lesser inflationary pressures in Japan, thereby influencing the JPY value indirectly.
In terms of direct AUD/JPY currency pair movement, current data shows the pair trading at 97.96, which is 2.3% above the 3-month average and within a relatively stable range. The AUD's rise comes amidst market speculation that suggests an ongoing appetite for riskier assets, as well as Australia's iron ore demand, particularly from China. This, combined with the AUD's recovery on the back of domestic monetary policy expectations and commodity price dynamics, could indicate a relatively optimistic trajectory for the AUD against JPY moving into 2024.
