AUD/JPY rebounds above 98.00 on positive risk tone

AUD/JPY holds positive ground around 98.30 in Thursday’s early European session.

Japan’s foreign stock investments fell by ¥446B, weighing on the Japanese Yen. 

The hawkish expectations of the RBA provide some support to the Aussie. 

The AUD/JPY cross recovers some lost ground to near 98.30, snapping the three-day losing streak during the early European session on Thursday. A generally positive risk tone and a decline in Japan’s foreign stock investments drag the Japanese Yen (JPY) lower against the Australian Dollar (AUD). 

Data released by the Ministry of Finance showed on Thursday that foreign investment in Japanese stocks fell by ¥446 billion for the week ending November 23, compared to investments of ¥127.6 billion in the previous week. Foreign capital outflows exert some selling pressure on the JPY and act as a tailwind for AUD/JPY. Nonetheless, the rising geopolitical tensions in the Middle East and the Russia-Ukraine war could boost the safe-haven flows, benefiting the JPY against the Aussie. 

On the other hand, the downside for the AUD might be limited due to the hawkish remarks from the Reserve Bank of Australia (RBA). Australia’s monthly Consumer Price Index (CPI) inflation for October remained well within the Australian central bank target, but the RBA is likely to want more proof price rises have moderated before it will cut interest rates. Capital Economics' Mr. Thieliant said that price pressures are only moderating very slowly.