AUD/JPY Holds Losses Near 114.50 After Australian CPI Inflation Data

• AUD/JPY weakens to near 114.50 in Wednesday’s early Asian session. 
• Australia’s CPI inflation rose to 4.6% YoY in March, softer than expected. 
• BoJ left the policy rate unchanged at 0.75% at its April policy meeting on Tuesday. 

The AUD/JPY cross declines to around 114.50 during the early Asian trading hours on Wednesday. The Australian Dollar (AUD) softens against the Japanese Yen (JPY) following the release of the Australian inflation report. Traders brace for Japan’s Tokyo Consumer Price Index (CPI) data, which is due later on Friday. 

Data released by the Australian Bureau of Statistics (ABS) on Wednesday showed that the country’s CPI inflation climbed to 4.6% YoY in March from 3.7% in February, driven largely by a fuel shock from the Middle East conflict. This figure came in softer than the expectations of 4.7%. Meanwhile, the monthly CPI rose 1.1% in March, compared to the previous reading of 0%.

The Aussie attracts some sellers in an immediate reaction to the softer-than-expected inflation data. However, a tight labor market and stronger-than-expected growth in late 2025 have supported expectations for another interest rate hike by the Reserve Bank of Australia (RBA) in May. This, in turn, could help limit the AUD’s losses. 

On Japan’s front, the Bank of Japan (BoJ) decided to hold the short-term interest rate steady at 0.75% after concluding its two-day monetary policy review meeting on Tuesday, as widely expected. 

According to the policy statement, the central bank will continue to raise interest rates in accordance with developments in the economy, prices, and financial markets. It said wages and prices may face upward pressure more than what the output gap suggests. The BoJ will scrutinise the timing and pace of policy adjustment with a close eye on economic and price impact from Middle East war developments.