AUD/JPY eyes more downside below 96.00 on light hawkish RBA minutes

• AUD/JPY has attempted to build a cushion around 96.00 after tumbling from 96.50.
• A lower-than-expected hawkish commentary in RBA minutes has weakened the aussie bulls.
• An unchanged PBOC monetary policy has also weighed pressure on the antipodean.
• Improvement in Japan’s headline National CPI has weakened the cross.

The AUD/JPY pair has sensed a sigh of relief around 96.00 after witnessing a sheer downside from 96.50 in the Tokyo session. A lot of catalysts have weighted pressure on the cross. A lower-than-expected hawkish commentary on interest rates by the Reserve Bank of Australia (RBA) from its minutes has weakened the aussie bulls. RBA policymakers discussed a rate hike of 25 or 50 basis points (bps). The next rate hike will be more data-dependent and will keep in mind the consequences on the economy.

In September’s monetary policy meeting, RBA Governor Philip Lowe announced a fourth rate hike of 50 basis points (bps) and pushed the Official Cash Rate (OCR) to 2.35%. Apart from that, the RBA policymakers cited that the OCR is expected to peak around 3.85% and the inflation rate will top around 7%. With the current pace of hiking the OCR by 50 bps, the central bank will reach the desired target by December 2022.

Meanwhile, an unchanged People’s Bank of China (PBOC) monetary policy will keep the aussie bulls on the tenterhooks. A rate cut in Prime Lending Rate (PLR) was expected by the market participants as price pressures remained lower and acceleration in growth rate was higher than desired. It is worth noting that Australia is a leading trading partner of China and an unchanged monetary policy against expectations will scale down its export numbers against forecasts.

On the Tokyo front, Japan’s Ministry of Finance (MOF) stated that the government will spend 3.48 trillion yen in budget reserves to cope with price hikes and covid-19, as per Reuters. The headlines cleared that the inflation rate is picking up pace now in the Japanese region. The statement could be matched with the release of Japan’s National Consumer Price Index (CPI) numbers.

The headline National CPI has landed at 3%, higher than the forecasts and the prior release of 2.6%. Also, the core CPI that excludes food and oil prices has improved to 1.6% that the former figure of 1.2% but remained lower than the expectations of 1.7%.