AUD/JPY aims to recapture 89.00 ahead of Australian Employment data

• AUD/JPY is looking to recapture the immediate resistance of 89.00 as BoJ TO remain dovish ahead.
• Japanese officials are confident that wage growth is on track and but decelerating PPI is telling a different story.
• A release of higher-than-anticipated Australian Employment Change could renew fears of more rate hikes from the RBA.

The AUD/JPY pair is looking to seize back the critical resistance of 89.00 in the Asian session. The risk barometer is in a bullish trajectory for the past two trading sessions as novel Bank of Japan (BoJ) Governor Kazuo Ueda has advocated for an extension of the already decade-long ultra-loose monetary policy to achieve inflation steadily above 2%.

Japanese officials are confident that wage growth is on track and but decelerating Producer Price Index (PPI) is telling a different story. Monthly PPI (March) has not shown any move as expected by the market participants. While annual PPI has landed higher at 7.2% than the consensus of 7.1% but remained lower from the former release of 8.1%. Firms' inability to keep rates of goods and services accelerating at factory gates is a sign of weak demand from households.

Analysts at Commerzbank expect that the Japanese Yen is only likely to appreciate in the long term if there is this early move away from current monetary policy.

Over BoJ’s Yield Curve Control (YCC), IMF has commented that allowing more flexibility in YCC could have some repercussions for global markets although it could also help prevent abrupt policy changes later that could trigger large spillovers.

On the Australian Dollar front, investors are awaiting the release of the Employment data (March) for fresh impetus. The street is anticipating an addition of fresh 20K jobs in the Australian economy lower than the former release of 64.6K. While the Unemployment Rate is expected to increase to 3.6% vs. 3.5% released in February.

A release of higher-than-anticipated job additions could renew fears of more rate hikes from the Reserve Bank of Australia (RBA) as RBA Governor Philip Lowe left room open for more rate hikes in case Australian inflation remains persistent.