AUD/JPY remains on the defensive below 95.00 amid the cautious mood, all eyes on BoJ rate decision

• AUD/JPY remains on the defensive around 94.75 ahead of the BoJ key event.
• Australian Manufacturing PMI dropped to 48.2 from 49.6; Services PMI posted 50.5 in September vs. 47.8 prior.
• Japan’s National Consumer Price Index (CPI) for August came in at 3.2% YoY from 3.3% in July.
• Market players will closely watch the Bank of Japan (BoJ) monetary policy meeting.

The AUD/JPY cross remains under selling pressure and trades in negative territory for the second consecutive day during the early Asian session on Friday. At the press time, the cross is up 0.03% on the day at 94.71.

The latest data on Friday showed that the preliminary S&P Global Australian Services PMI posted 50.5 in September, improved from 47.8 in August. On the other hand, the Manufacturing PMI declined to 48.2 from 49.6 in the previous reading. The Composite Index was also improved from 48.0 to 50.2. The mixed Australian economic data fail to boost the Aussie as investors turn to a cautious mood ahead of the highly-anticipated Bank of Japan (BoJ) interest rate decision.

On the Japanese Yen front, BoJ is widely expected to keep its short-term interest rate target of -0.1% and its 10-year bond yield target of around 0%. The Japanese central bank has previously declared that monetary policy shifts would not be considered until local wage and inflation data meet its projections. Markets are eager to see whether Governor Kazuo Ueda would deliver any fresh signals regarding the timing of a policy move and other tweaks to its Yield Curve Control (YCC) during his post-meeting press conference.

About the data, Japan’s National Consumer Price Index (CPI) for August came in at 3.2% YoY from 3.3% in July. Additionally, the National CPI ex Fresh Food improved from 3.0% in July to 3.1% in August, whereas the National CPI ex Food, Energy came in at 4.3% compared to 4.3% in previous readings.

Market participants will closely watch the Bank of Japan (BoJ) interest rate decision due later on Friday. This event could trigger the volatility in the market and give a clear direction to the AUD/JPY cross.