- AUD/JOY is being injected with an adrenaline rush amid unchanged Bank of Japan interest rate policy.
- The Bank of Japan’s interest rate is -0.1%, and the 10-year government bond is held at around 0%.
- Investors expected an upward revision to 2023 and 2024 inflation forecasts
The AUD/JPY pair is witnessing a sizeable bid as the Bank of Japan (BoJ) maintains its stance on interest rate policy unchanged. Bank of Japan Governor Haruhiko Kuroda’s status quo has led to a sharp sell-off in the Japanese yen. The Risk Barometer crossed the critical resistance of 91.00 in one move. At press time, Cross hit an intraday high above 91.30.
The Bank of Japan has kept interest rates at -0.1%, keeping its 10-year Japanese government bond (JGB) target around 0%. The streets were already expecting an unchanged monetary policy, but the lack of upward revisions to inflation forecasts for CY2023 and 2024 and the lack of development of a successor to BOJ Kuroda will force investors to dump the Japanese yen. lost. The BOJ has said it will continue to buy government bonds on a large scale and will respond nimbly at each maturity.
Meanwhile, the release of the Bank of Japan’s quarterly outlook report also provides clues for further action. The Japanese economy is likely to recover with the help of policy easing of the impact of the coronavirus pandemic and supply constraints. The Bank of Japan will not hesitate to take additional easing measures if necessary.
In the Australian market, the release of the December jobs report should see a bullish run for the Australian dollar. According to consensus, the unemployment rate he expects to remain stable at 3.4%. Separately, the Australian economy must have added 22.5K new jobs to the labor market in December. This is lower than his previous 64K addition.