Yen Strengthens as BoJ Hints at Hawkish Shift, AUD/JPY Dips

The Australian Dollar (AUD) weakened against the Japanese Yen (JPY) on Monday, with AUD/JPY falling to near 97.50 during European trading. This decline followed a hawkish speech by Bank of Japan (BoJ) Governor Kazuo Ueda in Parliament on Friday, suggesting a potential shift in the central bank's monetary policy stance.

Governor Ueda indicated that the BoJ could consider raising interest rates further if its economic projections prove accurate. This hawkish sentiment was reinforced by recent inflation data released in Japan. The country's National Consumer Price Index (CPI) rose by 2.8% year-on-year in July, marking the third consecutive month at this level and the highest since February. The core CPI, excluding fresh food, also climbed to 2.7%, meeting expectations and reaching its peak since February.

Despite the BoJ's potential for tightening, the AUD/JPY pair's downside may be capped by the Australian Dollar's own strength. Following US Federal Reserve (Fed) Chair Jerome Powell's dovish speech at the Jackson Hole Symposium on Friday, market sentiment has turned more optimistic, bolstering the Aussie.

Furthermore, the Reserve Bank of Australia (RBA) continues to maintain a hawkish outlook. Minutes from the RBA's recent meeting revealed that board members agreed on the unlikely prospect of a near-term interest rate cut. RBA Governor Michele Bullock has also indicated the central bank's willingness to raise rates again if necessary to combat inflation.

While the BoJ's hawkish shift has pushed AUD/JPY lower, the Australian Dollar's own robust stance and the RBA's continued hawkishness could limit the pair's decline.

Note: The provided table with currency prices was not included in this rewritten article as it does not contribute to the article's main narrative and its information is presented in a format that cannot be easily transferred into plain text.