AUD/JPY trades around 95.00 after paring intraday gains

• AUD/JPY offers its daily profits following reports that China is preparing to cut rates on $5 trillion worth of mortgages.
• Australia’s Consumer Inflation Expectations eased to 4.4% in September, slightly down from the four-month high of 4.5% recorded in August.
• BoJ board member Naoki Tamura stated that there is no predetermined plan for the pace of future rate hikes.

AUD/JPY trims its intraday gains, still trading higher around 95.10 during the European session on Thursday. The Australian Dollar (AUD) appreciated against its peers, driven by improved risk-on sentiment amid rising odds of the Federal Reserve (Fed) beginning its easing cycle with a 25-basis points interest rate cut in September.

However, the Aussie Dollar receives downward pressure as China, one of Australia’s key trading partners, is reportedly set to cut interest rates on $5 trillion worth of mortgages as soon as this month. According to Bloomberg, several Chinese banks are already finalizing preparations for these mortgage rate adjustments, which could take effect as early as September.

Australia’s Consumer Inflation Expectations eased to 4.4% in September, down slightly from August’s four-month high of 4.5%. This decline highlights the central bank’s efforts to strike a balance between bringing inflation down within a reasonable timeframe and maintaining gains in the labor market.

The former Reserve Bank of Australia (RBA) Governor Bernie Fraser criticized the current RBA board for being overly focused on inflation at the expense of the job market. Fraser suggested that the Board should lower the cash rate, warning of “recessionary risks” that could have severe consequences for employment.

The Japanese Yen (JPY) remains subdued following the remarks from the Bank of Japan (BoJ) board member Naoki Tamura. Tamura stated that there is “no preset idea on the pace of further rate hikes.” Unlike in the US and Europe, Japan’s rate hikes are expected to proceed more gradually. The exact timing for when short-term rates in Japan might reach 1% will depend on the economic and price conditions at that time.