The “Aussie” has struggled against the Japanese Yen since the aggressive “Carry Trade” unwind last July, which saw a more than 17% fall in a few weeks—when crowded trades unwind, the results are often dramatic. According to preliminary figures released by the Japan National Tourism Organisation (JNTO), a staggering 920,200 Australians visited Japan in 2024 – the highest number on record! This number looks set to eclipse 1 million in 2025, assuming the exchange rate remains conducive, i.e. Japan is cheaper than Australia. Again, if China turns the corner, it will be supportive of the $A, and while the RBA and BOJ are setting off on different paths, the interest rate differential still supports the $A – the current RBA Cash Rate is 4.35% while the BOJ equivalent is 0.5%, their highest since 2008.
- We have pivoted to a cautiously bullish stance on the AUD-JPY while it can hold above 94.
