AUD\/JPY reduced its daily losses but stayed negative, trading near 112.40 in Asian hours on Monday. The move came as the Australian Dollar weakened amid higher risk aversion after US Vice President JD Vance said Washington and Tehran did not reach a peace agreement in Islamabad after 21 hours of talks. <\/p>\n
US President Donald Trump said the US would begin blockading all ships entering or leaving the Strait of Hormuz. US Central Command confirmed operations targeting maritime traffic to and from Iranian ports from 10 AM ET (14:00 GMT) Monday. <\/p>\n
Higher energy costs added to inflation concerns, with Australia\u2019s monthly inflation gauge at a record 1.3% in March. The Reserve Bank of Australia has raised rates by 50 basis points to 4.10%, and markets expect another hike in May. <\/p>\n
The yen faced stagflation worries as oil prices rose, while higher energy costs increased expectations of a near-term Bank of Japan rate rise. The BoJ is due to decide policy on April 28, assessing whether elevated global energy and commodity prices support tightening. <\/p>\n
Japan\u2019s 10-year government bond yield rose to about 2.47% on Monday as oil prices climbed after the talks broke down. The Sakura Report said members weighed inflation risks against growth risks, while all nine regions described conditions as \u201crecovering moderately\u201d, \u201cpicking up\u201d, or \u201cpicking up moderately\u201d. <\/p>\n
Given the spike in risk aversion from the US-Iran situation, we should expect volatility to jump across asset classes. Historically, geopolitical events in the Middle East cause the VIX index to surge, as we saw in late 2023. We should therefore consider buying options that profit from large price swings, as markets are likely to remain unsettled. <\/p>\n
The US blockade of the Strait of Hormuz directly threatens a significant portion of the world’s oil supply, as historically around 20% of global consumption passes through it. This makes long positions in crude oil futures or call options a direct way to trade the escalating tensions. A supply shock of this magnitude could push prices far higher than we saw during the energy crisis that began in late 2025. <\/p>\n
For the AUD\/JPY pair, conflicting pressures make a simple directional bet risky. The AUD is suffering from risk-off sentiment, but the RBA’s aggressive rate hikes offer support, while the JPY is weakened by soaring energy import costs. This suggests that the classic carry trades, like those we saw unwind during the 2008 financial crisis, are under extreme pressure from both sides. <\/p>\n
The upcoming Bank of Japan meeting on April 28 is now a critical event. The surge in Japan’s 10-year bond yield to 2.47% signals intense market pressure on the BoJ to hike rates to combat imported inflation. We can use derivatives to position for a significant market reaction to this decision, as any policy shift will cause a major repricing in the Yen.<\/p>\n
Create your live VT Markets account<\/a>\u00a0and\u00a0start trading<\/a>\u00a0now. <\/b><\/p>\n","protected":false},"excerpt":{"rendered":" AUD\/JPY hovered near 112.40 as risk aversion, Hormuz blockade fears, and rising oil prices pressured currencies.<\/p>\n","protected":false},"author":38,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[46],"tags":[],"class_list":["post-44758","post","type-post","status-publish","format-standard","hentry","category-live-updates"],"acf":[],"aioseo_notices":[],"featured_image_src":null,"featured_image_src_square":null,"author_info":{"display_name":"josephine","author_link":"https:\/\/www.vtmarketsglobal.com\/en\/author\/josephine\/"},"_links":{"self":[{"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/posts\/44758","targetHints":{"allow":["GET","POST","PUT","PATCH","DELETE"]}}],"collection":[{"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/users\/38"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/comments?post=44758"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/posts\/44758\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/media?parent=44758"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/categories?post=44758"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/tags?post=44758"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}