AUD/JPY INCHES GRADUALLY TOWARDS 89.00 AS INVESTORS AWAIT PBOC POLICY FOR FRESH IMPETUS20 January 2023, 01:47

AUD/JPY is marching towards 89.00 after a recovery move ahead of PBoC’s policy announcement.

A dovish monetary policy is expected from the PBoC considering China’s reopening reforms.

The Japanese Yen has managed to recover its BoJ’s unchanged policy-inspired losses.

The AUD/JPY pair is inching higher towards 89.00 in early Tokyo after rebounding from 88.12 on Thursday. Earlier, the risk barometer witnessed an intense sell-off after the release of the downbeat Australian Employment report for December.

The Australian Bureau of Statistics reported that the Australian labor market has witnessed a lay-off of 14.6K employees while the street was expecting an addition of fresh 22.5k jobs. Also, the Unemployment Rate has climbed to 3.5% vs. the expectation and the prior release of 3.4%.

Firms have been forced to rely on retrenchment of a lay-off of employees amid weak growth projections. Higher interest rates by the Reserve Bank of Australia (RBA) are impacting heavily on the e economic activities. However, RBA Governor Philip Lowe could be delighted with an increment in the Unemployment Rate as it will open room for a downside in the Consumer Price Index (CPI), which has been stubborn due to robust consumer spending.

For further action, investors will focus on the interest rate decision by the People’s Bank of China (PBoC). Odds are favoring a dovish monetary policy as reopening reforms are needed to be supported by higher liquidity to spurt the scale of economic activities. Also, the PBoC policymakers are required to support the Chinese vulnerable real estate market. Investors should be aware of the fact that Australia is a leading trading partner of China and a PBoC’s easy monetary policy will provide strength to the Australian Dollar.

On the Tokyo front, after the maintenance of status-quo by Bank of Japan (BoJ) Governor Haruhiko Kuroda, investors are shifting their focus to further development for gauging a successor for BOJ’s Kuroda. The Japanese Yen has managed to recover their losses, which were recorded after the BoJ kept interest rates and bond yields target unchanged. This indicates that investors are still betting on an exit from an expansionary monetary policy by the BoJ ahead.