AUD/JPY Approaches 89.00 In Advance Of China Inflation And Australia Employment

During the Asian session, the AUD/JPY pair seeks to surpass the key resistance level of 89.00. Since Monday, when the Bank of Japan (BoJ) favored the continuation of a decade-long ultra-loose monetary policy to protect the Japanese economy from the cascading effects of a global downturn, the risk barometer has increased significantly.

In light of the optimism in AUD/USD, the AUD/JPY pair is following suit. The Australian Dollar is likely to remain volatile until China's Consumer Price Index (CPI) data is released. According to projections, the annual rate of inflation would remain unchanged at 1%. The monthly CPI is anticipated to increase by 0.1% compared to the 0.5% deflation recorded in February.

Despite the dismantling of pandemic controls, investors are losing faith in China's economic prospects, so this bodes well for the country's economic recovery. A recovery in retail demand would also instill firms with the confidence to increase their production capacity. Investors should be aware that Australia is China's most important trading partner, and that a recovery in China will also boost the Australian Dollar.

Australia's employment data will be closely monitored later this week. According to estimates, the Australian economy added 20,000 positions in March, which is less than the previous release of 64,600 jobs. In addition, the unemployment rate will rise to 3.6% from 3.5% previously. It appears that the Reserve Bank of Australia's (RBA) higher interest rates are decreasing labor demand. RBA Governor Philip Lowe has previously stated that the Australian economy will continue to contract as a result of rising interest rates, and that inflation will continue to decline.

Bloomberg reported that "Australia's Treasurer Jim Chalmers warned of 'complex and challenging' global economic conditions as he prepared to travel to Washington for the G20 meeting.