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This month, AUD/JPY reached highs since February 2018, around 85.80. Looking ahead, economists at Westpac forecast the pair to trade around 90.00 by the end of the year.  

10-year JGB yields will remain at around zero percent

“Ongoing COVID-19 vaccine rollouts and very generous fiscal and monetary policy will drive a coordinated global upswing over 2021 and into 2022. This will help underpin commodity demand and thus A$ outperformance on most cross rates, even after substantial appreciation from the pandemic lows.”  

“A renewed rise in global bond yields should support AUD/JPY, given the BoJ’s commitment to ‘around’ 0% yield for the 10-year JGB. Japanese demand for foreign bonds has jumped since the fiscal year began in April. While the RBA’s dedication to loose policy is very clear, steepening yield curves globally should help A$ on crosses.”  

“Our base case is for AUD/JPY to trend towards 86 over Q2, to 87 by Sep and our year-end forecast is 90.”


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