• AUD/JPY plunges almost 1% to near 106.00 as the Yen outperforms across the board.
• Japan’s PM Takaichi warns of intervention to address speculative moves against Yen.
• Investors await the Australian Q4 and December CPI data.

The AUD/JPY pair holds onto early losses near 106.00 during the European trading session on Monday. The cross is down almost 1% as the Japanese Yen (JPY) outperforms its peers, following comments from Japan’s Prime Minister (PM) Sanae Takaichi that the government could intervene against one-way excessive moves.

“Cannot comment on market but will closely monitor speculative moves and respond appropriately,” Takaichi said. She also vowed to achieve a “two-year suspension of 8% consumption tax”. Takaichi has also been arguing about loosening tight fiscal conditions, and a lower consumption tax is a crucial step towards fulfilling her economic agenda.

Hopes of looser fiscal conditions have been pushing the cost of funds for Japan's government higher. 10-year yields on Japanese Government Bonds (JGBs) have rebounded after a three-day corrective move on Monday.

On the monetary policy front, the Bank of Japan (BoJ) left interest rates unchanged at 0.75% on Friday, while leaving the door open for more interest rate hikes.

Meanwhile, the Australian Dollar (AUD) trades broadly firm ahead of the release of Consumer Price Index (CPI) data for the fourth quarter and December 2025 on Wednesday. Q4 CPI is estimated to have grown at an annualized pace of 3.6%, faster than the prior release of 3.2%.

Hot CPI figures would prompt expectations of an interest rate hike by the Reserve Bank of Australia (RBA) in the near term. Currently, traders see a 60% chance that the RBA will hike borrowing rates  in the policy meeting next week, Reuters reported.