AUD/JPY hovers near 98.50 following Australia's monthly inflation data

• AUD/JPY faced challenges as Australia's trimmed mean fell to RBA's target band of 2% to 3%.
• Australia's monthly Consumer Price Index increased by 2.3% YoY in November, the highest level recorded since August.
• Former BoJ Governor Haruhiko Kuroda forecasted additional interest rate hikes in the years ahead.

AUD/JPY recovers its small daily losses, trading around 98.40 during the Asian session on Wednesday. However, the Australian Dollar (AUD) faces challenges against its peers following the release of the monthly inflation data. Australia's trimmed mean, a closely watched measure of core inflation, fell to an annual 3.2% from 3.5%, edging closer to the Reserve Bank of Australia's (RBA) target band of 2% to 3%.

However, Australia's monthly Consumer Price Index (CPI) rose 2.3% year-over-year in November, surpassing the market forecast of 2.2% and marking an increase from the 2.1% rise seen in the previous two months. This is the highest reading since August. The figure remains within the RBA's target range of 2-3% for the fourth consecutive month, aided by the ongoing impact of the Energy Bill Relief Fund rebate.

The Japanese Yen (JPY) strengthens on concerns about potential intervention by Japanese authorities in the open market. However, uncertainty surrounding the timing of the Bank of Japan's (BoJ) next rate hike may limit the JPY's gains.

Former Bank of Japan (BoJ) Governor Haruhiko Kuroda presented a research paper on Wednesday, forecasting additional interest rate hikes in the years ahead. Kuroda highlighted that Japan's economy is expected to grow at an annual rate of over 1%, driven by increasing real wages and robust consumer spending. The BoJ's cautious pace in raising rates aligns with a positive wage-inflation cycle, which helps maintain inflation at the 2% target.