AUD/JPY declines towards 94.00 ahead of Japan inflation data

• AUD/JPY is expected to drop to near 94.00 as the risk-off impulse has escalated.
• Japan’s headline and core CPI are seen higher at 3.1% and 2.0% respectively.
• The BOJ announced a bond-buying program worth $667 million.

The AUD/JPY pair has turned sideways in early Tokyo after a vertical downside move from above 95.00 in the New York session. The risk-off impulse heated further after escalating UK political crisis due to the resignation of new UK Prime Minister Liz Truss and soaring returns on US government bonds. In early Tokyo, the asset is oscillating in a narrow range of 94.17-94.38 as investors are awaiting the release of Japan’s National Consumer Price Index (CPI) data.

As per the consensus, the headline CPI will land higher at 3.1% vs. the prior release of 3.0%. While, the core CPI which excludes food and energy prices from the calculation, could accelerate to 2.0% against the former release of 1.6%.

Suspicious commentary from Japan’s top currency diplomat Masato Kanda narrates that the vertical fall in the risk barometer could be an intervention action by the Bank of Japan (BOJ). On Thursday, Japan’s Kanda cited that he “will not comment on whether we are intervening now or have intervened today.” He further cited that, “Excessive and disorderly forex moves have a negative impact on the economy.” the economy is ready to take action in forex markets but will not comment on forex levels.

On Thursday, an emergency bond-buying program worth $667 million announced by the Bank of Japan (BOJ) triggered the risk of further weakness in the Japanese yen. The announcement followed commentary from Japan Prime Minister Fumio Kishida in which he cited the risk of weaker economic prospects due to external demand shocks.

On the Australian front, weaker job market data has impacted the aussie bulls. The Employment Change dropped sharply to 0.9k than the projections of 25k and the prior release of 33.5k. While the Unemployment Rate was released in line with the estimates and the former figure of 3.5%.