AUD/JPY drops to its lowest level since September, further below 94.00 mark

• AUD/JPY turns lower for the third straight day and is pressured by a combination of factors.
• BoJ rate hike bets and trade war fears continue to drive safe-haven flows towards the JPY.
• Wednesday’s softer Australian CPI print undermines the AUD and contributes to the slide.

The AUD/JPY cross attracts fresh sellers following an Asian session uptick to the 94.20 area and turns lower for the third straight day on Thursday. This also marks the sixth day of a negative move in the previous seven and drags spot prices to the 93.70 area, or the lowest level since September 2024 in the last hour.

Investors seem convinced that the Bank of Japan (BoJ) will hike interest rates further amid broadening inflation in Japan. This overshadows BoJ Governor Kazuo Ueda's comments last week about potentially increasing regular bond buying and triggers a fresh leg up in JGB yields. Apart from this, concerns about US President Donald Trump's tariff plans further underpin the safe-haven JPY and exert downward pressure on the AUD/JPY cross.

In fact, Trump ordered an investigation on copper imports to assess whether tariffs should be imposed due to national security concerns. This comes on top of 10% tariffs imposed on goods from China and threats of new reciprocal tariffs for each country. Apart from this, Wednesday's softer domestic consumer inflation figures contribute to the Australian Dollar's (AUD) relative underperformance and further weigh on the AUD/JPY cross. 

Meanwhile, the latest leg down validates this week's breakdown through the previous year-to-date low, around the 94.25 region. A subsequent fall and acceptance below the 94.00 mark suggests that the path of least resistance for the AUD/JPY cross remains to the downside. Traders now look forward to a slew of key economic reports from Japan on Friday, including Industrial Production, Retail Sales, and Tokyo inflation, for a fresh impetus.