AUD/JPY faces barricades around 92.80 ahead of Australian Inflation

• AUD/JPY has slipped after facing hurdles around 92.80 as investors await Australian inflation data.
• An increment in Aussie CPI could force the RBA to return to a 50 bps rate hike culture.
• Chatters of unwinding of BOJ’s monetary easing have strengthened the Japanese yen.

The AUDJPY pair has dropped after the short-lived rebound near 92.48 terminated around 92.80 in the Tokyo session. The risk barometer has remained extremely volatile in a couple of trading sessions led by public protests in China against the rollback of lockdown measures to restrict the epidemic.

The cross is expected to continue its volatile gyrations after the release of the monthly Australian Consumer Price Index (CPI) data. As per the estimates, the monthly CPI data is expected to escalate to 7.4% vs. the prior release of 7.3%.

An increment in inflationary pressures could be followed by hawkish commentaries from Reserve Bank of Australia (RBA) policymakers. It is worth noting that Australian inflation has not displayed signs of exhaustion yet nor a peak has been formed, which will continue to create havoc for the RBA. This might force RBA Governor Philip Lowe to ditch the smaller rate hike culture and to return to 50 basis points (bps) rate hike structure in its December monetary policy meeting in order to chain the roaring inflation.

Meanwhile, the Chinese city of Zhengzhou, home to Apple Inc.’s largest manufacturing site in China, said that it was lifting a lockdown of its main urban areas put in place five days ago as Covid cases climbed. The headline could infuse optimism in the cautious market mood ahead.

On the Tokyo front, chatters over the unwinding of the Bank of Japan (BOJ)’s monetary easing are strengthening the Japanese yen. According to an economists’ poll by Reuters, more than 90% of economists have supported the view of phasing out monetary easing in the latter half of CY2023.