In the early European market on Tuesday, the AUD/JPY cross-pair was down to approximately 112.65. The Australian dollar (AUD) gained a bit following the Reserve Bank of Australia’s (RBA) decision on interest rates. Many traders are now looking forward to Gov. Michelle Bullock’s press conference scheduled for 4:30 p.m. Japan time, hoping for some hints of new stimulus.
As expected, the RBA announced a rise in the official cash rate (OCR) by 25 basis points, bumping it up from 4.10% to 4.35% after the May monetary policy meeting. The bank’s Monetary Policy Statement pointed out a significant increase in uncertainty concerning the domestic economic outlook and inflation.
The impacts of the Iran war are projected to cut this year’s annual growth rate to 1.3%, and growth estimates for 2026 have dropped by half a percentage point compared to the predictions made in February before the conflict.
For the Japanese yen, there’s considerable tension in the market, especially with growing suspicions regarding possible interventions by Japanese authorities. Finance Minister Satsuki Katayama mentioned that Japan might take measures against speculative currency movements.
While not officially confirmed, there were several unofficial indications—a sort of “final warning” from senior government figures—that the Ministry of Finance (MoF) and the Bank of Japan (BoJ) may have stepped in to influence the foreign exchange market on Friday in attempts to bolster the yen. A pertinent question now is, “How long will this yen appreciation last?” as posed by Thu Lan Nguyen at Commerzbank.
