AUD/JPY faces barricades around 95.00 despite dovish BOJ minutes

• AUD/JPY has struggled to surpass the critical hurdle of 95.00 despite dovish BOJ minutes.
• The BOJ seeks support from the wage-price index to keep inflation above desired levels.
• Australian inflation rate for Q2CY22 is seen higher at 6.2% vs. 5.1% reported earlier.

The AUD/JPY pair is declining after giving a downside break of the minute consolidation formed in a range of 94.97-95.18 in the early Tokyo session. Broadly, the asset has remained firmer and this mild correction could be termed as ‘profit-booking’ by the market participants. The risk barometer has slipped after the release of the dovish minutes by the Bank of Japan (BOJ) of its June monetary policy.

Investors should be aware of the fact that BOJ Governor Haruhiko Kuroda kept its interest rate policy unchanged last week. The BOJ remained continued with its ultra-loose monetary policy in order to keep the inflation rate above the desired levels. However, its inability in elevating its wage rates is becoming a major hurdle and the inflation rate above 2% is seldom by the support of soaring energy bills and food items. Also, the BOJ announced that it will defend its cap on bond yields with unlimited buying.

On the aussie front, investors are awaiting the release of the inflation data by the Australian Bureau of Statistics, which is due on Wednesday.  The overall Consumer Price Index (CPI) for the second quarter of CY2022 is seen at 6.2% vs. 5.1% reported earlier.  This will force the Reserve Bank of Australia (RBA) to elevate its interest rates further in its August monetary policy. RBA Governor Philip Lowe has already elevated its Official Cash Rate (OCR) to 1.35% after a consecutive 50 basis points (bps) rate hike in July.