Market sentiment shifts as majority of analysts predict imminent BoJ policy tightening in December meeting.
Japanese monetary authorities signal heightened sensitivity to currency fluctuations and BTC/USDtheir inflationary consequences.
Australian economic indicators present conflicting signals, creating volatility in antipodean currency valuations.
The AUD/JPY currency pair extended its bearish momentum during Friday's Asian session, approaching the psychologically significant 100.30 threshold. This downward pressure primarily stems from renewed strength in the Japanese Yen following revised monetary policy expectations. A comprehensive Reuters poll revealed that over half of surveyed economists now anticipate the Bank of Japan will implement its first rate increase since 2007 at the upcoming December policy gathering.
Market participants are increasingly pricing in a more aggressive normalization path, with an overwhelming consensus expecting benchmark rates to reach 0.50% by Q1 2025. The dispersion of terminal rate projections remains notably wide, reflecting uncertainty about Japan's capacity to sustain higher borrowing costs. Political considerations are also entering the calculus, as analysts weigh potential second-order effects from US electoral outcomes on global inflationary pressures.
Bank of Japan Governor Kazuo Ueda recently emphasized the central bank's growing concern about exchange rate volatility and its implications for price stability. These comments follow reports that Japanese policymakers are preparing substantial fiscal measures to offset cost-of-living pressures, including a proposed economic stimulus package approaching ¥13 trillion.
Japanese inflation metrics showed continued moderation in October, with both headline and core CPI measures decelerating to multi-month lows. The services sector demonstrated tentative signs of recovery in the latest PMI readings, though manufacturing activity unexpectedly deteriorated to its weakest level since spring. This mixed data landscape complicates the BoJ's policy normalization timeline.
Across the currency pair, Australian economic indicators failed to provide consistent directional cues. While manufacturing contraction showed signs of easing, the services sector unexpectedly slipped into negative territory for the first time this year. These developments occurred against the backdrop of persistent hawkish rhetoric from RBA officials, creating crosscurrents for AUD valuation.
The Judo Bank PMI series revealed Australia's manufacturing sector remained in contractionary territory for an unprecedented tenth consecutive month, though the pace of decline moderated substantially. Conversely, the services PMI dipped below the critical 50.0 threshold, marking a concerning reversal in the nation's dominant economic sector. These conflicting signals come ahead of crucial RBA policy deliberations in December.