Australia, NZ dollars bounce against yen as BOJ’s Ueda disappoints hawks

SYDNEY: The Australian and New Zealand dollars bounced versus the yen on Monday as Japan’s top central banker flagged further policy tightening but left open the question of timing, disappointing policy hawks.

The Aussie rose 0.5% to 100.23 yen after a 1.1% tumble on Friday when the Japanese currency gained broad support amid intervention warnings from the government.

The kiwi was up 0.35% to 90.81 yen, having dropped 1% on Friday.

Bank of Japan Governor Kazuo Ueda reiterated that interest rates would continue to rise gradually should Japan’s economy develop in line with the central bank’s outlook.

However, he made no mention of whether a hike would come in December, despite the recent rapid declines in the yen.

Against the greenback, the Antipodean currencies were still pinned near multi-month lows as recent US data reinforced the view that the strength in the economy will limit the scope for further rate cuts by the Federal Reserve.

The Aussie edged 0.1% higher to $0.6473 on Monday, having ended last week down 1.8% in the biggest weekly drop in four months.

Support is around $0.6441.

The kiwi dollar was flat at $0.5864, after falling 1.8% last week to as far as $0.5838, the lowest since October 2023.

Goldman Sachs on Monday cut its economic outlook for Australia and New Zealand given the impact from US President-elect Donald Trump’s proposed tariffs on China, the biggest trading partner of the two countries.

Annual growth for Australia has been lowered 20 basis points to 1.8%, while for New Zealand it has been cut by a similar amount to 1.7%.

“We think the tariffs are essentially exporting weaker growth to the rest of the world but not necessarily exporting a lot more inflation,” said Andrew Boak, Goldman Sachs Australia’s chief economist.

Boak is sticking to his call for a first rate cut from the Reserve Bank of Australia in February, which is much more dovish than current market pricing that suggests the first easing will not come until May.

This week, the RBA will publish the minutes of its last policy meeting on Tuesday, while Governor Michele Bullock will deliver a speech on Thursday, though neither is likely to alter current market thinking on rates.

RBA Assistant Governor Christopher Kent is scheduled to talk about financial markets and monetary policy in a speech at 5:30 p.m. AEDT (0630 GMT) on Monday.