AUD/JPY is trading around 95.00 after comparing intraday gains

• AUD/JPY is giving away its daily gains on reports that China is set to cut mortgage rates on $5 trillion.
• Australian consumer inflation expectations fell to 4.4% in September, down slightly from a four-month high of 4.5% in August.
• BoJ board member Naoki Tamura said there was no predetermined plan for the pace of future rate hikes.

AUD/JPY is paring its intraday gains, still trading higher around 95.10 during the European session on Thursday. The Australian dollar (AUD) appreciated against its peers as risk sentiment improved amid increasing chances that the Federal Reserve (Fed) will begin its easing cycle with a 25 basis point interest rate cut in September.

However, the Aussie dollar is receiving downward pressure as China, one of Australia’s key trading partners, is set to cut interest rates on $5 trillion of mortgage loans as soon as this month. According to Bloomberg, several Chinese banks are already finalizing preparations for these mortgage rate adjustments, which could take effect as early as September.

Australian consumer inflation expectations fell to 4.4% in September, down slightly from August’s peak of 4.5%. This decline highlights the central bank’s efforts to strike a balance between reducing inflation within a reasonable timeframe and maintaining gains in the labor market.

Former Reserve Bank of Australia (RBA) governor Bernie Fraser has criticized the current RBA board for focusing too much on inflation at the expense of the labor market. Fraser suggested the Council should cut the cash rate, warning of “recession risks” that could have serious consequences for employment.

The Japanese yen (JPY) remains weak following remarks from Bank of Japan (BoJ) board member Naoki Tamura. Tamura said “there is no preconceived idea of ​​the pace of further rate hikes.” Unlike the US and Europe, rate hikes in Japan are expected to occur more gradually. Exactly when short-term rates in Japan might reach 1% will depend on economic and price conditions at that time.