The Australian dollar edged higher against the yen on Monday as investors positioned for an expected Reserve Bank of Australia rate increase, while a fresh warning from Japanese authorities kept intervention risk in focus.
AUD/JPY traded around 110.82 at 09:16 GMT, up 0.10%, after briefly reaching 111.02. The pair held above its 20-day moving average near 110.42 but remained below the late-October highs.
Tuesday’s RBA decision is the immediate catalyst. A quarter-point increase is widely anticipated, leaving the Australian dollar sensitive to what policymakers signal about the next move.
RBA Interest Rate Decision: Markets Expect 4.85%
The RBA announces its decision on Tuesday, November 3, at 2:30 p.m. AEDT. It will also publish updated economic forecasts, followed by a press conference an hour later. Thirty of 32 economists surveyed by Reuters expect a 25-basis-point increase from 4.60% to 4.85%, the highest rate since 2008. Market pricing puts the probability of an increase near 90%.
The Australian dollar gained 1.3% against its US counterpart in October as expectations for tighter policy strengthened, Reuters reported.
For AUD/JPY, that means some support from higher Australian rates is already reflected in positioning. Delivering the expected increase could help the currency, but guidance about subsequent meetings will shape whether those gains last.
A decision to hold would be a larger surprise and could trigger a sharper adjustment.
Australian Inflation Keeps Pressure on the RBA
Last week’s inflation figures strengthened the case for further tightening. Annual trimmed mean inflation reached 3.7% in the third quarter, above expectations for 3.6%, while the quarterly increase was 1.0%. Those figures showed underlying price pressures remaining above the RBA’s 2%–3% target despite the rate increases already delivered this year.
The policy challenge is whether another increase will be enough. Investors will examine the new inflation forecasts for signs that borrowing costs may need to stay elevated for longer. If the RBA signals that it is approaching a pause, the Aussie’s response could be restrained even after a hike. A stronger warning about persistent inflation would offer more support to expectations for additional tightening.
Japan Intervention Warning Limits Yen Selling
Japanese Finance Minister Satsuki Katayama said on Monday that Tokyo would act against disorderly currency moves or excessive speculation, while maintaining close coordination with the United States. She said market conditions had improved since the yen weakened to 160 per dollar, but declined to comment on current exchange-rate levels, Reuters reported.
The comments do not confirm that intervention is imminent. They nevertheless remind investors that rapid yen depreciation can draw an official response. Although the warning centred on broader currency conditions, a sudden rise in the yen could also pull AUD/JPY lower. That creates a risk for positions built primarily around Australia’s higher interest rates.
Bank of Japan Outlook Adds Another AUD/JPY Risk
The BOJ held its policy rate at 1.25% on October 30 but raised its inflation forecast and reiterated that further increases remained possible. One board member favoured an immediate increase to 1.50%. Australia still offers a substantial policy-rate advantage. An RBA increase to 4.85%, with Japan unchanged, would widen that gap to 3.60 percentage points.
However, currency markets also respond to the expected direction of rates. If investors anticipate further Japanese tightening while the RBA approaches a prolonged hold, support from the interest-rate gap could weaken.
Actual returns from holding one currency against another also depend on market financing rates, costs and exchange-rate movements.
AUD/JPY Technical Analysis: 111.00 Resistance in Focus
AUD/JPY is holding above the 20-day moving average near 110.42, giving the recent recovery some support. Monday’s retreat from 111.02, however, leaves 111.00 as the first hurdle.
A daily close above that level would bring the late-October highs around 111.50 into focus, followed by the 112.00 area. Initial support sits near Monday’s low at 110.54, with the moving average below it. Losing both would expose 110.00.
Momentum has improved, with the MACD line above its signal and close to zero. That supports the recovery attempt, although price still needs to clear the recent highs.
Will AUD/JPY rise if the RBA raises rates?
A hike could support the Australian dollar, but the move is widely expected. The response will depend heavily on the RBA’s forecasts and guidance about further increases.
How would Japanese intervention affect AUD/JPY?
Yen-buying intervention could strengthen Japan’s currency and push AUD/JPY lower. Monday’s warning does not establish that intervention has occurred or is imminent.
When is the next RBA rate announcement?
The decision is due on November 3, 2026, at 2:30 p.m. AEDT.
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