The Australian dollar advanced above 91.00 against the Japanese yen on Monday, buoyed by investor reaction to a mix of economic data out of both Australia and Japan. The move highlighted growing confidence in Australia’s outlook, even as the yen remained weighed down by weak domestic indicators and a dovish policy stance.
Australia posted firmer-than-expected retail sales, reinforcing the view that domestic demand remains resilient despite global headwinds. The data helped lift the AUD/JPY pair, as traders interpreted the numbers as a sign that the Reserve Bank of Australia may hold off on rate cuts for now.
In contrast, Japanese economic figures painted a softer picture, with industrial output and consumer confidence both underwhelming. The subdued data kept pressure on the yen, already under strain from the Bank of Japan’s commitment to ultra-loose monetary policy. “The divergence in central bank outlooks is pushing AUD/JPY higher,” one currency analyst said.
The pair also benefited from a broader uptick in global risk appetite, which tends to favor the Australian dollar over the safe-haven yen. Stronger equity markets and improving sentiment around China’s economy—Australia’s key trading partner—further supported the aussie’s gains.
Analysts noted that while the yen could recover if the Bank of Japan signals any shift in policy or if risk sentiment deteriorates, for now the momentum favors the Australian currency. The interest rate and growth differentials between the two economies are driving capital flows into AUD/JPY.
Looking ahead, traders will monitor upcoming inflation data from both countries for more clues on monetary policy direction. Until then, the Australian dollar is likely to remain supported against the yen, barring any major surprise from central banks or global markets.
