AUD/JPY rebounds to near 93.00 ahead of RBA MPS

• AUD/JPY sees establishment above 93.00 as investors await the release of the RBA MPS.
• The RBA’ MPS will unveil the strategic planning behind the unexpected rate hike of 25 bps.
• Tokyo’s CPI has landed at 2.5%, almost doubled the prior print of 1.3%.

The AUD/JPY pair has rebounded sharply after attracting significant bids around 92.30. The risk barometer witnessed a steep fall earlier after the hangover of the unexpected rate hike by the Reserve Bank of Australia (RBA) on May 3.

RBA Governor Philip Lowe announced a rate hike by 25 basis points (bps) to 0.35%, higher than the preliminary forecast of 15 bps. Higher than expected rate hike was backed by soaring inflation in the aussie area. Earlier, the Australian Bureau of Statistics reported the yearly Australian inflation at 5.1%, much higher than the estimates of 4.6% and the prior print of 3.5%. Mounting price pressures forced the RBA to adopt a hawkish tone and feature a rate hike. Going forward, investors will keep an eye over the release of the RBA monetary policy statement (MPS), which will disclose the strategic planning behind the rate hike decision. Also, it will unveil the current status of the critical economic indicators.

Meanwhile, the Japanese yen is underperforming as its pullback season has ended. The Bank of Japan's (BOJ) ultra-loose monetary policy will keep on haunting the yen bulls. More stimulus is expected from the BOJ going forward as the Japanese economy has yet not reached its pre-pandemic levels. Tokyo’s Consumer Price Index (CPI) has landed at 2.5% much higher than the expectations of 1.9% and the prior print of 1.3%. This may force the BOJ to shift its tone slightly neutral.