AUD/JPY defends 85.00 post-BOJ decision

• AUD/JPY pares part of its ealry  losses in the Asian session on Thursday.
• Major Australian banks project early RBA rate hike estimates.
• BOJ maintains the status quo, slashes GDP and inflation forecasts.

AUD/JPY edges lower for the second straight day. After testing the high of 86.07 in the US session, the pair closed lower near 85.50.  As of writing, the AUD/JPY is trading at 85.26, down 0.29% for the day.

Investors favored the riskier asset after the Bank of Japan (BOJ) kept its benchmark rate unchanged at -0.10% with the 10-year Japanese Government Bond (JGB) yield rate at around 0% during its October meeting  by an 8-1 vote, as widely expected. Further, in its latest publications, the BOJ expects core CPI at 0.0% versus 0.6% forecast in July while the FY 2021-22 Gross Domestic Product (GDP) arrives at +3.4% compared to +3.8% previous expectations.

It is worth noting that S&P 500 Futures are trading at 4,551, up 0.14% for the day.

On the other hand, the aussie holds the gains on the early rate hikes by the Reserve Bank of Australia (RBA). The Commonwealth Bank of Australia (CBA),one of Australia’s ‘Big 4’ banks, forecasted a rate hike in November of 2022, to 0.25% from previous bets for a May 2023 hike.

As for now, the divergent policy stand between RBA and BOJ amid risk-on mood will affect the pair’s performance in the short term.

AUD/JPY additioanl levels