AUD/JPY: Australian dollar / Japanese yen

AUD/JPY is the price of one Australian dollar in Japanese yen. If the pair is at 100.00, one Australian dollar costs 100 yen. It pairs a currency that has tended to do well when the world feels optimistic with one that has tended to strengthen when it does not, which is why many traders watch AUD/JPY as a quick barometer of global risk appetite. It is also a textbook carry pair: Australian interest rates have usually been well above Japanese ones.

This profile covers who trades it, the two central banks behind it, what moves it, how it behaves by session, what it costs, a pip value example, correlations, its notable episodes and how to approach it as a beginner.

What AUD/JPY is and who trades it

AUD/JPY is a cross: it does not include the US dollar. The Australian dollar is the base currency and the yen the quote, so a rising AUD/JPY means the Australian dollar is strengthening against the yen. Our guide to currency pairs explains how crosses are derived; this one is roughly AUD/USD multiplied by USD/JPY.

The two economies are linked directly: Japan has long been one of Australia's largest export markets, especially for energy and minerals. On top of that commercial flow sit Japanese retail and institutional investors who have historically been keen buyers of higher-yielding Australian dollar assets, macro funds using the pair to express views on global growth, and short-term traders in the Asian time zone.

Unlike EUR/JPY or GBP/JPY, AUD/JPY is not a "major" under ESMA's definition, because the Australian dollar is not on the list of USD, EUR, JPY, GBP, CAD and CHF. Retail clients in the EU are therefore capped at 20:1 leverage, meaning more margin per lot. See ESMA leverage limits.

The two economies and central banks behind it

Australia and the RBA

The Reserve Bank of Australia sets the cash rate and targets inflation of 2 to 3%. Since 2024 it has held eight monetary policy meetings a year (decisions are now taken by its Monetary Policy Board), with decisions announced at 14:30 Sydney time, which is between about 03:30 and 05:30 UK time depending on the time of year, because Australia and the UK move their clocks in opposite seasons. Australia is a resource-rich economy: iron ore, coal and liquefied natural gas are among its largest exports, and China is its largest trading partner.

Japan and the Bank of Japan

The Bank of Japan meets eight times a year. After decades of near-zero rates, a negative short-term rate from 2016 and yield curve control, it ended negative rates on 19 March 2024 and has raised rates gradually since. Japan's position as one of the world's largest creditor nations, with large savings invested abroad, underpins the yen's habit of strengthening when those savings come home in a crisis.

The result has usually been a wide interest rate differential in Australia's favour. Our guide to central banks and interest rates explains why the expected path matters most.

What typically moves AUD/JPY

Risk sentiment

This is the defining driver. The Australian dollar has tended to rise when investors are optimistic about global growth and commodities, and the yen has tended to strengthen as a safe haven when they are worried. Combine the two and AUD/JPY has often moved with global equity markets. On a sharp risk-off day, both sides can push the pair lower at once.

The carry trade

A carry trade borrows in a low-yielding currency to hold a higher-yielding one. AUD/JPY has been a favourite vehicle, because the rate gap has often been large. Carry positions tend to build gradually during calm markets and are closed quickly when volatility rises, which gives the pair a characteristic pattern: slow climbs and fast drops. That pattern is a tendency, and long periods have broken it.

China and commodities

Chinese industrial activity, property construction and steel output affect demand for Australian iron ore and coal. Chinese data releases, many of which come out during the Asian morning, and moves in commodity prices can shift the Australian dollar. The link is real but loose and varies over time.

Data and central bank decisions

Australian CPI, the monthly labour force survey, RBA decisions and minutes, Tokyo CPI, Japanese wage data and BoJ decisions all matter. Because most of these are released during the Asian session, the pair often makes its biggest data-driven moves overnight for UK-based traders. See how economic data moves forex.

Intervention

When the yen has weakened quickly, Japan's Ministry of Finance has at times bought yen, as in 2022 and 2024. Those operations, aimed mostly at USD/JPY, moved AUD/JPY too. See intervention.

Its character: liquidity, sessions and volatility

AUD/JPY is unusual among liquid pairs in that its home market is the Asian session. Times below are UK time; Japan does not use daylight saving, Australia's south-eastern states move their clocks in the southern summer (from early October to early April), and the UK in the northern summer, so the gaps shift by up to two hours across the year.

• Sydney and Tokyo (roughly 22:00 or 23:00 to 08:00 or 09:00 UK time): the most natural trading window. Australian and Japanese data, RBA and BoJ decisions and Chinese releases all land here.
• London morning (about 07:00 to 12:00 UK time): often still active as European desks react to the Asian session and to global risk moves.
• New York (about 13:00 to 21:00 UK time): active mainly when US data or Wall Street move risk sentiment.
• Late New York and rollover (around 22:00 UK time): typically the thinnest liquidity and widest spreads of the day.

The market hours tool shows these windows in your own time zone, and our market hours guide explains the daylight saving shifts.

AUD/JPY's day-to-day volatility has generally been higher than EUR/USD's, and its biggest moves have tended to come in bursts of global stress. For a UK or European trader, the awkward fact is that much of the action happens while you are asleep.

Costs of trading AUD/JPY

Spreads are typically wider than on the dollar majors, and widen noticeably around rollover, in thin holiday periods and around RBA, BoJ and Chinese data. Compare spreads at the hours you will actually trade; see spreads and commissions and why spreads widen.

The swap is often the most discussed cost. With Australian rates usually well above Japanese rates, long AUD/JPY positions have typically been the side that earns a credit or pays less, and short positions the side that pays. Broker markups reduce the credit and the differential changes as policy moves. Remember that a small overnight credit can be wiped out by a few pips of adverse movement; see swap and overnight financing.

Pip value: a worked example

On AUD/JPY a pip is 0.01 and profit and loss accrue in yen. These numbers are illustrative.

• One standard lot is 100,000 Australian dollars. A pip is 100,000 times 0.01 = 1,000 JPY.
• A mini lot is 100 JPY per pip; a micro lot 10 JPY per pip.

On a euro account with EUR/JPY at 160.00, 1,000 yen is about 6.25 EUR. On a dollar account with USD/JPY at 150.00, about 6.67 USD. On a pound account with GBP/JPY at 195.00, about 5.13 GBP.

Now a trade. You buy 0.2 lots (20,000 Australian dollars) at 100.00 with a stop at 99.00, 100 pips away. Each pip is worth 200 yen, so the stop is 20,000 yen, about 125 EUR at a EUR/JPY rate of 160.00, before spread and swap. Margin at 20:1 on 20,000 Australian dollars is 1,000 AUD, about 615 EUR at an illustrative EUR/AUD rate of 1.6250. Margin is collateral; it is not the maximum loss, and a gap can carry the price through your stop. The pip value calculator and margin calculator handle the conversions.

Correlations with other pairs

• AUD/USD and NZD/JPY have often moved in the same direction, because they share the Australian dollar or the risk-sensitive profile.
• USD/JPY, EUR/JPY and GBP/JPY share the yen, so on risk-off days all the yen crosses tend to fall together.
• Equity indices have frequently shown a positive relationship with AUD/JPY, which is the basis of its use as a risk barometer.

Holding long AUD/JPY, long AUD/USD and long EUR/JPY may feel diversified, but on a stressed day they can all be the same trade. Correlations change, sometimes abruptly; our guide to currency correlation shows how to check them.

Notable history

The 2008 financial crisis

AUD/JPY had been a favourite carry trade through the mid-2000s. When the global financial crisis intensified in late 2008, those positions were closed en masse and the pair fell very sharply in a matter of weeks. It remains the standard illustration of how a carry pair behaves when risk appetite collapses.

Negative rates and intervention in Japan

From 2016 the Bank of Japan ran a negative short-term rate, keeping the yen side of the carry trade very cheap. When the yen weakened rapidly in 2022 and 2024, Japan's authorities bought yen, and AUD/JPY dropped sharply with the other yen crosses each time. The BoJ ended negative rates on 19 March 2024.

The August 2024 carry-trade unwind

On 31 July 2024 the Bank of Japan raised rates, and on 2 August a weak US jobs report raised fears about US growth. Investors rushed to close positions funded in yen. On Monday 5 August 2024 the Nikkei 225 fell 12.4%, its worst day since 1987, and AUD/JPY dropped steeply alongside other yen crosses before partly recovering in the following days. Much of the move happened during the Asian session, before London opened, which meant UK and European traders woke to positions already far through their stops.

Trading AUD/JPY as a beginner

• Size for the drops. The pair's falls have tended to be faster than its rises. Size your position so that a move several times your normal stop would not be a disaster; see position sizing.
• Be honest about your hours. If the pair's key events happen while you sleep, you need a plan for open positions overnight: a stop you are content to have filled at a worse price, a smaller size, or not holding at all. See gap risk and weekend risk.
• Do not trade the swap. Collecting a small daily credit while taking full price risk is a poor exchange unless you understand the downside.
• Remember the lower leverage cap. At 20:1 the margin per lot is higher than on EUR/JPY. That is a sensible constraint, not an obstacle to work around.
• Watch for stacked exposure. Several yen crosses or several risk-sensitive currencies at once can concentrate your risk in one idea.
• Keep the odds in view. Most retail CFD accounts lose money and leverage magnifies losses. A demo account is a good place to see how the pair moves overnight.

Frequently asked questions

Why is AUD/JPY called a risk barometer?

Because the Australian dollar has tended to rise when investors are optimistic about growth and commodities, while the yen has tended to strengthen when they are worried. The pair therefore often moves in line with global stock markets. It is a rough guide, not a precise indicator.

Why is the leverage cap 20:1 on AUD/JPY but 30:1 on EUR/JPY?

ESMA's 30:1 cap applies only to pairs made of two of USD, EUR, JPY, GBP, CAD and CHF. The Australian dollar is not on that list, so AUD/JPY falls under the 20:1 cap for other currency pairs.

When is AUD/JPY most active?

During the Asian session, roughly from late evening to early morning UK time, when Australian and Japanese markets are open and most of their data is released. The London morning is often active too.

What is a carry trade in AUD/JPY?

It means holding the higher-yielding Australian dollar against the low-yielding yen to earn the interest difference through the daily swap. The credit is usually small relative to price moves, and carry positions can lose heavily when they are unwound quickly.

How much is a pip worth on AUD/JPY?

On a standard lot of 100,000 Australian dollars, a pip is 1,000 yen, roughly 5 to 7 units of pounds, euros or dollars depending on exchange rates at the time.