AUDJPY continues to struggle around 94.00 despite upbeat Aussie employment data

• AUDJPY is hovering around 94.00 as solid Australian job data has failed to cheer bulls.
• The Employment Change has accelerated by 32.2k while the Unemployment Rate has declined to 3.4%.
• External demand shocks and Covid-19 infections are responsible for a surprise downside in Japan’s GDP.

The AUDJPY pair has remained hovering around 94.00 despite the release of upbeat Australian employment data. As per the Australian Bureau of Statistics, the economy has managed to make fresh additions in the payroll market by 32.2k vs. the consensus of 15k and the prior release of 0.9k. Also, the Unemployment Rate has been trimmed to 3.4% the expectation of 3.6%, and the former figure of 3.5%.

Better-than-projected Australian employment data is going to delight the Reserve Bank of Australia (RBA) ahead. This will support RBA Governor Philip Lowe to continue its rate hike regime unhesitatingly. Considering the RBA minutes released this week, the central bank will continue with 25 basis points (bps) rate hike structure as policymakers believe that the Official Cash Rate (OCR) has already been hiked in a short span of time.

However, the inflation rate has not topped yet as a historic surge in price growth witnessed in the third quarter indicates its persistent nature. The Australian inflation rate escalated to 7.3%, crossing the consensus of 7.0%. This forced the RBA to lift its interest rate guidance to 8.0%. A tight market is also responsible for sky-rocketing price pressures as households have enough means for spending.

The heated risk profile is expected to cool down as the Russia-Poland noise has almost terminated and see no developments further.

On the Tokyo front, a surprising downside in the Gross Domestic Product (GDP) is haunting investors. Japan’s third-quarter GDP contracted by 0.3% vs. the expectation of an expansion of 0.3%. Comments from UOB over GDP contraction that “We were surprised by the q/q contraction in 3Q as we underestimated the impact of stronger inflation, the wave of COVID-19 infections in summer, and a significant weakening of the yen that amplified the country’s already ballooning import bill” could punish the Japanese yen ahead.