AUD/JPY skids below 94.30 on flat Aussie Unemployment Rate, BOJ in focus

• AUD/JPY has slipped to near 94.25 on a lower-than-expected jobless rate.
• The Unemployment Rate landed at 3.9%, lower than the consensus of 3.8%.
• Employment generation of more than 60k jobs in May will support the RBA to tighten policy further.
• A continuation of an ultra-loose monetary policy is expected from the BOJ.

The AUD/JPY pair is scaling sharply lower as the Australian Bureau of Statistics has reported a lower-than-expected Unemployment Rate. The Australian economy has added 60.6k jobs in its labor force, more than doubled than the estimates of 25k and the prior print of 4k. However, the Unemployment Rate remained unchanged at 3.9% but lower than the forecasts of 3.8%.

A higher Employment Change has delighted the Reserve Bank of Australia (RBA) to dictate a bumper rate hike again in its July monetary policy meeting. It is worth noting that the RBA elevated its Official Cash Rate (OCR) by 50 basis points (bps) in the first week of June. The announcement was higher than the consensus of 25 bps. In times when the Australian economy was facing hurdles in generating employment opportunities, the RBA dictated an aggressive interest rate hike, which could have its own repercussions. The economy generated only 4k jobs in April, which indicates its efficiency in economic growth prospects.

On the Tokyo front, investors’ focus has shifted to the monetary policy by the Bank of Japan (BOJ), which is due on Friday. BOJ Governor Haruhiko Kuroda is expected to keep continue its ultra-loose monetary policy. The inflation rate in Japan has crossed the target rate of 2%, however, the price pressures are much guided by costly fossil fuels rather than a broad-based recovery in the aggregate demand.