Australian Dollar Strengthens Against Japanese Yen as China’s September CPI Inflation Picks Up

Last Updated on 14/10/2026

• AUD/JPY maintains its upward momentum after China’s September CPI inflation climbed 0.9% year-on-year, while the PPI jumped to 5.0%, exceeding market forecasts.
• The Japanese Yen remains under pressure as Bank of Japan officials appear reluctant to pursue another consecutive interest rate hike.
• Market participants remain cautious amid growing speculation that Japanese authorities could step in to support the weakening Yen.

AUD/JPY extends its advance for a second consecutive session, trading near 110.70 during Asian trading on Wednesday. The currency pair maintains its upward momentum as the Australian Dollar (AUD) strengthens following the release of China’s September inflation data, given the country’s importance as one of Australia’s key trading partners.

China’s National Bureau of Statistics reported that annual Consumer Price Index (CPI) inflation increased to 0.9% in September from 0.8% in August, slightly below market expectations of 1.0%. On a monthly basis, CPI rose 0.2%, slowing from the previous month’s 0.4% increase and missing forecasts for a 0.3% gain. Meanwhile, the Producer Price Index (PPI) climbed 5.0% year-over-year, accelerating from August’s 3.8% rise and exceeding expectations of 4.5%.

Analysts at Commerzbank note that the Reserve Bank of Australia’s (RBA) latest communication conveyed an important signal to foreign exchange markets. The central bank expressed concern that a weaker Australian Dollar could intensify inflationary pressures by making imported goods more expensive, highlighting the currency’s influence on the domestic inflation outlook. Commerzbank also observed that the RBA believes a rise in the global neutral interest rate could weaken the AUD if Australia’s neutral rate did not increase by a comparable amount. However, the central bank appeared to assume that Australia’s neutral rate had risen accordingly, suggesting domestic monetary conditions have kept pace with global developments.

The AUD/JPY cross also benefits from continued weakness in the Japanese Yen (JPY), following reports that Bank of Japan (BoJ) officials are reluctant to deliver another consecutive interest rate increase, an uncommon move for the central bank.

Nevertheless, the BoJ is still broadly expected to continue normalizing monetary policy over the longer term. Meanwhile, traders remain alert to the possibility of further Japanese government intervention to support the struggling Yen.

Analysts at MUFG/BTMU point out that Prime Minister Takaichi recently reiterated in parliament that the US and Japanese finance ministers remain in close communication regarding foreign exchange developments. She also indicated that currency issues were discussed in general terms during the latest US-Japan summit. Her acknowledgment that a weaker Yen presents both advantages and disadvantages highlights the policy challenges confronting Japanese authorities.

MUFG/BTMU further note that the Yen has maintained relatively stronger levels since the joint US-Japan intervention in late July. In their assessment, the intervention has helped curb additional Yen depreciation in recent months, although the prospect of renewed official action remains a key consideration for currency traders.