AUD/JPY advances towards 94.50 amid mix Japan labor data, BOJ policy eyed

• AUD/JPY is marching towards 94.50 after the release of mixed Japan employment data.
• Japan’s jobless rate has expanded to 2.6% while Jobs/Applicant Ration has improved to 1.34.
• The BOJ may announce a stimulus package along with a dovish tone on interest rates.

The AUD/JPY pair is marching towards the immediate hurdle of 94.50 in the early Tokyo session as the Statistics Bureau of Japan has reported mixed employment data. The Unemployment Rate has escalated to 2.6% against expectations and the prior release of 2.5%. While the Jobs/Applicants ratio has improved to 1.34 vs. the projections of 1.33.

Risk sentiment remained negative on Thursday after the US administration announced that it is sending Ukraine a new $275 million package of weapons and other aid, to strengthen the Ukrainian rebels to drive Russian forces out of key areas in the south as the winter closes in, reported AP News. The war headlines restricted the cross from surpassing the critical hurdle of 95.00.

Going forward, the monetary policy of the Bank of Japan (BOJ) will remain in focus.

In order to accelerate inflationary pressures in Japan and to safeguard the economy from the impact of external demand shocks, the BOJ is left with no other option than to continue an ultra-dovish policy stance on interest rates. BOJ Governor Haruhiko Kuroda may also announce a stimulus package along with a softer tone on policy rates.

On Thursday, Japanese officials announced that they are planning to release more stimulus to the economy to spurt the overall demand. Japan’s Finance Minister Shunichi Suzuki said that “tomorrow, a stimulus package will be decided.” Japan’s national broadcaster, NHK, reported that a stimulus package of more than JPY 29 trillion is in consideration.

On the Australian front, investors are shifting their focus toward the interest rate decision by the Reserve Bank of Australia (RBA), which is due next week. As price pressures have escalated to 7.3%, RBA Governor Philip Lowe could return to 50 basis points (bps) rate hike spell.