AUD/JPY eyes 92.00 as Covid-19 in China challenges global supply chains, risk-off impulse active

• AUD/JPY has slipped near 92.20 amid improvement in safe-haven appeal, which has underpinned yen.
• Lockdown measures in China have resulted in supply chain bottlenecks.
• A profit-booking in the asset after reaching extended levels has brought a sell-off in the currency.

The AUD/JPY pair is falling like a house of cards in the Asian session as the negative market sentiment has underpinned the Japanese yen against aussie. The cross has eroded almost 1% from its previous close on Friday. The pair has carry-forwarded its sell-off on Monday and is likely to find a cushion to near the round level support at 92.00. A vertical downside was recorded in the cross since Thursday after it failed to sustain above the psychological resistance of 95.00.

Aussie bulls have lost strength as the Covid-19 pandemic in China has disrupted the supply chains. The laborious path of the zero-Covid strategy has forced the Chinese authorities to resort to severe lockdown measures, which has affected the aggregate demand and has also challenged the global supply chains. Australia, being the leading exporter to China, is going to hurt amid supply chain bottlenecks, which eventually will affect its fiscal revenues due to a steep reduction in its exports. Also, the antipodean is facing headwinds on a higher preliminary reading of the Consumer Price Index (CPI), which is due on Wednesday. The Aussie inflation is likely to land at 4.6% against the prior figure of 3.5%.  

Meanwhile, the Japanese yen is resisting further weakness broadly. It looks like the Japanese yen is gaining strength on short-coverings as its long-duration weakness has resulted in some profit-booking, which still does not favors an end to its downside.