AUDJPY finds immediate support around 93.50 as focus shifts to RBA minutes

• AUDJPY has sensed a buying interest of around 93.50 ahead of RBA minutes/Japan’s GDP.
• The RBA minutes will dictate the reasoning behind announcing a 25 bps rate hike in November.
• BOJ’s Kuroda sees a recovery in the economy as the impact of supply constraints and the pandemic eases.

The AUDJPY pair has witnessed an intermittent pullback after dropping to near 93.50 in early Asia. A short-term relief cushion around 93.50 doesn’t seem long-lasting citing price action and volatility ahead. The release of the Reserve Bank of Australia (RBA) policy minutes and Japan’s Gross Domestic Product (GDP) would bring wild gyrations into the asset.

The release of the RBA minutes will clarify the rationale behind the announcement of the 25 basis points (bps) despite a historic surge in the inflation rate. For the third quarter, the headline inflation soared to 7.3% vs. the projections of 7.0% and the prior release of 6.3%. Therefore, think thanks were expecting that RBA Governor Philip Lowe will return to the 50 bps rate hike regime. The absence of exhaustion in the inflationary pressures can be cared for by aggressive policy tightening measures.

Later this week, investors will focus on the employment data, which will release on Thursday. As per the projections, the Australian economy has added 15k jobs in October month vs. the former release of 0.9k. The jobless rate is seen unchanged at 3.5%.

On the Tokyo front, investors are looking for the release of the Gross Domestic Product (GDP) data. Analysts at ING believe that the third quarter GDP is expected to grow 0.5% QoQ, seasonally adjusted, which is a slower pace than the previous quarter. Reopening effects still led the overall growth but higher inflation and the weak yen partially offset the recovery.”

Meanwhile, positive commentary from Bank of Japan (BOJ) Governor Haruhiko Kuroda failed to fuel sheer optimism in Japanese yen. BOJ Governor is of the view that the economy is likely to recover as the impact of supply constraints and the pandemic eases. The tight labor market will drive wages and the inflation rate to grow around 3% this fiscal year.