Japanese Yen and Australian Dollar News: Interventions and the RBA Minutes

BoJ’s Ueda Fuels Yen Volatility Amid Policy Uncertainty

On Monday, November 18, Bank of Japan Governor Kazuo Ueda drove the USD/JPY pair higher. Despite the USD/JPY briefly revisiting the 156 mark on Friday, Governor Ueda offered a noncommittal outlook on interest rate hikes. He reiterated the Bank’s gradual approach to adjusting policy accommodation, contingent on economic activity and price trends.

The BoJ has highlighted its focus on other economies, particularly the US, where fears of a hard economic landing have subsided. However, Trump’s election victory has created uncertainty, with potential US tariffs likely to disrupt global trade.

Governor Ueda’s comments have also lowered expectations for a BoJ intervention, likely weighing on Japanese Yen demand.

Investors should monitor BoJ commentary on Tuesday, November 19, as Monday’s comments refueled monetary policy uncertainty. The focus could shift to the Japanese government for intervention before Friday’s crucial inflation numbers. Meanwhile, the BoJ may also signal the possibility of a December rate hike if the USD/JPY crosses 160.

BoJ Rate Path: Expert Insights

On Monday, The Kobeissi Letter analyzed recent intervention trends, highlighting the Yen’s pullback. The analysis noted:

“The USD/JPY currency pair has risen 11% over the last 2 months, now near levels where Japan’s Ministry of Finance intervened this year. Japan spent a record 9/8 trillion Yen ($62 billion) to support the currency in late April and early May. In July, Japan spent an additional 5.5 trillion Yen ($36 billion) to support their currency. This came after the Japanese Yen hit its lowest level in 38 years. Is the Yen setting up for more intervention?”

Japanese Yen Daily Chart

Shifting our focus to Tuesday’s US session, October housing start and building permit figures may influence US dollar demand. Economists consider the housing sector a barometer for the US economy. Deteriorating housing market conditions may dent consumer confidence, dampening private consumption and inflationary pressures.

Weaker-than-expected data could drag the USD/JPY toward 153.5. On the other hand, strong data may delay expectations for Fed rate cuts, driving the pair toward 156.

Investors should also track FOMC member commentary amidst shifting sentiment toward a December Fed rate cut. Calls to delay an interest rate cut until Q1 2025 could further support a return to 156.

AUD/USD Faces RBA Minutes and China Trade Risks

Turning to the AUD/USD, the RBA Meeting Minutes will likely impact Aussie dollar demand on Tuesday. On November 6, the RBA maintained the cash rate at 4.35% despite Australia’s Monthly CPI Indicator dropping into the Bank’s 2-3% target range.

While headline inflation has softened, the RBA noted that underlying inflation remains elevated. Significantly, the RBA projected inflation to return to the target range mid-point by late 2026. The inflation outlook, coupled with Trump’s election win and tariff threats on Chinese goods, has fueled uncertainty about the RBA rate path.

Board members’ perspectives on potential US policy changes and global trade terms could significantly influence the AUD/USD pair.

RBA Governor Michele Bullock recently highlighted the uncertainty surrounding US tariffs, stating,

“It’s not easy to dissect what’s going to happen with all of this. It might be inflationary in some ways. But it might be deflationary in the other ways — if China ends up badly affected by this, that badly affects us.”

China accounts for one-third of Aussie exports. With Australia’s trade-to-GDP ratio above 50%, weaker demand from China may weigh on the Aussie economy and the Aussie dollar.

RBA support for a near-term rate could drag the AUD/USD toward $0.64500. Conversely, signals of the status quo on rate cuts and a lack of immediate concerns over US tariffs may drive the pair to $0.65500.

Australian Dollar Daily Chart

In Tuesday’s US session, housing sector data will draw interest after Monday’s stronger-than-expected NAHB Housing Market Index. Positive housing market data could support an AUD/USD drop toward $0.64500. However, weaker numbers may retrigger bets on a December Fed rate cut, driving the pair to $0.65500.

After Fed Chair Powell’s urge for caution against further policy moves without economic clarity, FOMC member commentary also requires consideration. Support for delaying rate cuts may pull the AUD/USD lower, while dovish comments could support a return to $0.65500.

Traders should remain vigilant, tracking central bank statements and economic data for timely insights.