AUD/JPY slips to near 96.00 on lower-than-expected Australian GDP data

• AUD/JPY has dropped to near 96.00 as Aussie GDP remained lower than estimates on a quarterly basis.
• Broadly, the cross is firmer as the RBA stepped up its interest rates by 50 bps fourth time.
• Japan’s Overall Household Spending has declined despite prudent BOJ.

The AUD/JPY pair has sensed barricades around 96.10 while attempting to recapture the crucial resistance of 96.10 after the release of lower-than-expected Australian Gross Domestic Product (GDP) data. The economic data has landed at 0.9%, lower than the expectations of 1% but above the prior release of 0.8% on a quarterly basis. However, the annual data has improved to 3.6% against the estimates and the prior print of 3.5% and 3.3% respectively.

On Tuesday, the cross displayed a juggernaut rally after the announcement of the interest rate decision by the Reserve Bank of Australia (RBA). RBA Governor Philip Lowe announced a fourth consecutive 50 basis points (bps) interest rate hike. The hawkish decision on interest rates was highly expected by the market participants as price pressures are soaring in the Australian economy and have not displayed any sign of exhaustion yet. Australian Official Cash Rate (OCR) has escalated to 2.35%.

Also, the guidance from the RBA on interest rates and the inflation rate was worth noting. RBA has provided a target for an interest rate of 3.85%, which will be achieved by next year. Also, the price pressures are expected to top at 7%.

Meanwhile, the yen bulls are worried over a decline in consumption levels by Japanese households. The Bank of Japan (BOJ) is continuously flushing liquidity into the market to scale up the overall spending and inflation rate. However, a decline in the Overall Household Spending data on Tuesday has indicated consumers’ pessimism in the economy. The economy data landed at 3.4% lower than the expectations of 4.2% and the prior release of 3.5%.