AUD/JPY attracts some sellers near 97.00 as BoJ holds rates steady

• AUD/JPY is weakening around 97.05 in the Asian session on Friday, down 0.22% on the day.
• The BoJ kept interest rates unchanged in September, as expected.
• CBA analysts expect the RBA to cut its official cash rate (OCR) in December.

The AUD/JPY cross is losing ground around 97.05, snapping a four-day winning streak during Asian trading hours on Friday. The cross is falling after the Bank of Japan (BoJ) announced its policy decision.

As expected, the BoJ decided to keep the short-term rate target in the range of 0.15%-0.25% after concluding its two-day monetary policy review meeting on Friday. Japan’s BoJ remains cautious about further growth as it could hurt economic activity and hamper the demand-driven inflation it is trying to support.

However, Japanese officials will meet again in October and December, leaving the door open for more rate hikes after recent economic data revealed inflation in Japan rose more than expected. Growing speculation that Japan’s central bank will raise interest rates again by the end of this year is providing some support for the Japanese yen (JPY) and acting as a headwind for AUD/JPY.

Data released by Japan’s Statistics Bureau showed on Friday that the country’s consumer price index (CPI) rose 3.0 percent from a year earlier in August, compared with 2.8 percent in July. Meanwhile, core CPI, which excludes volatile fresh food costs, rose 2.8 percent from 2.7 percent previously in August, matching market expectations of 2.8 percent.

On the Australian front, analysts at the Commonwealth Bank of Australia (CBA) moved their estimated timing of the first RBA rate cut from November 2024 to December 2024, with a rate cut of 25 basis points (bps). This, in turn, could weigh on the Australian dollar (AUD) against the JPY in the short term.