AUD/JPY surpasses 91.00 in one go as BoJ keeps interest rates and YCC unchanged
|- AUD/JOY has been injected with an adrenaline rush amid the unchanged BoJ’s interest rate policy.
- BoJ’s interest rate has remained unchanged at -0.1% and 10-year JGBs at around 0%.
- Investors were expecting upward revision in inflation projections for CY2023 and 2024
The AUD/JPY pair has witnessed significant bids as the Bank of Japan (BoJ) has kept its stance on interest rate policy unchanged. The maintenance of status-quo by BoJ Governor Haruhiko Kuroda has brought an intense sell-off for the Japanese Yen. The risk barometer has surpassed the critical resistance of 91.00 in a single move. At the press time, the cross made an intraday high above 91.30.
The BoJ has kept the interest rate unchanged at -0.1% and the 10-year Japan Government bonds (JGBs) target at around 0%. The street was already expecting an unchanged monetary policy but the absence of upward revision in inflation projections for CY2023 and 2024 and no development on BoJ Kuroda’s successor has forced investors to dump the Japanese Yen. The central bank has announced that it will continue large-scale JGB buying, and make nimble responses for each maturity.
Meanwhile, the release of the BoJ quarterly outlook report is also providing cues about further action. Japan's economy is likely to recover with the help of policy easing of impact from coronavirus pandemic, and supply constraints. The central bank will not hesitate to take additional easing measures as necessary.
On the Aussie front, the release of December’s employment report will trigger a power-pack action for the Australian Dollar. As per the consensus, the Unemployment Rate is expected to remain steady at 3.4%. Apart from that, the Australian economy must have added 22.5K fresh jobs in the labor market in December, lower than the former additions of 64K.
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