“Bucking its own trend, AUD/JPY has now risen for five consecutive days, reaching 93.60 during European trading on Thursday. This surge is driven by a pro-risk sentiment, following the Court of International Trade’s decision to block President Donald Trump from imposing his proposed “Liberation Day” tariffs. The court deemed Trump’s executive orders unlawful, finding that he exceeded his authority in imposing broad import tariffs. The administration had previously announced higher duties on imports from countries with large trade surpluses, including China and the European Union, with a baseline tariff of 10% on most goods entering the US. Despite this setback, Trump has shown no signs of backing down, declaring on his social media app Truth Social that he is on a “Mission from God”.
However, the AUD/JPY’s ascent may be limited as the Australian Dollar (AUD) faces potential challenges. Governor Michele Bullock of the Reserve Bank of Australia (RBA) has indicated that further rate cuts may be necessary in future policy meetings if the economic outlook worsens. Additionally, Bank of Japan (BoJ) Governor Kazuo Ueda has expressed concerns about potential spillover effects on the shorter-term Japanese debt market, amid a surge in super-long bond yields. Ueda’s statements reflect the growing caution over financial stability risks as interest rate dynamics shift in Japan. Ueda has previously stated that the BoJ is prepared to adjust monetary policy as needed in order to meet inflation targets.”