AUD/JPY rises to near 95.00 as Australian Dollar advances due to rising Copper prices
- AUD/JPY gained as the Australian Dollar strengthened on rising Copper futures.
- US President Donald Trump plans to implement tariffs on Copper imports within weeks.
- The Japanese Yen weakened amid concerns that upcoming US reciprocal tariffs could impact key Japanese exports.
AUD/JPY rebounded from previous session losses, trading around 94.90 during European hours on Wednesday. The currency cross strengthened as the commodity-linked Australian Dollar (AUD) found support from a surge in Copper futures, which hit a record high above $5.20 per pound. Given Australia’s role as a major copper exporter, this boost in commodity prices lifted the AUD.
Meanwhile, US President Donald Trump stated in a Newsmax interview on Wednesday that he intends to impose tariffs on copper imports within weeks. Although the Commerce Department originally had until November 2025 to investigate and decide on potential tariffs, recent developments suggest they may be implemented much sooner.
However, the AUD slipped against its peers following the release of February’s Monthly Consumer Price Index (CPI), which rose 2.4% year-over-year—slightly below both January’s 2.5% increase and market expectations of 2.5%.
The AUD/JPY cross also climbed as the Japanese Yen (JPY) weakened on Wednesday. Investors braced for the impact of upcoming US reciprocal tariffs, which could affect key Japanese exports. Additionally, a rebound in risk assets, including equities and commodities, reduced demand for the safe-haven JPY.
Bank of Japan (BoJ) Governor Kazuo Ueda told parliament that the central bank would continue raising interest rates if economic conditions align with projections. He noted that economic growth has surpassed expectations, with a positive cycle of rising incomes fueling consumer spending.
Tariffs FAQs
Tariffs are customs duties levied on certain merchandise imports or a category of products. Tariffs are designed to help local producers and manufacturers be more competitive in the market by providing a price advantage over similar goods that can be imported. Tariffs are widely used as tools of protectionism, along with trade barriers and import quotas.
Although tariffs and taxes both generate government revenue to fund public goods and services, they have several distinctions. Tariffs are prepaid at the port of entry, while taxes are paid at the time of purchase. Taxes are imposed on individual taxpayers and businesses, while tariffs are paid by importers.
There are two schools of thought among economists regarding the usage of tariffs. While some argue that tariffs are necessary to protect domestic industries and address trade imbalances, others see them as a harmful tool that could potentially drive prices higher over the long term and lead to a damaging trade war by encouraging tit-for-tat tariffs.
During the run-up to the presidential election in November 2024, Donald Trump made it clear that he intends to use tariffs to support the US economy and American producers. In 2024, Mexico, China and Canada accounted for 42% of total US imports. In this period, Mexico stood out as the top exporter with $466.6 billion, according to the US Census Bureau. Hence, Trump wants to focus on these three nations when imposing tariffs. He also plans to use the revenue generated through tariffs to lower personal income taxes.