AUD/JPY approaches 94.50 amidst mixed Japanese employment statistics, with BOJ policy under focus

The AUD/JPY pair is approaching the immediate barrier of 94.50 in the early Tokyo session following the release of mixed employment statistics from the Statistics Bureau of Japan. The Unemployment Rate has risen to 2.6%, exceeding estimates and the previous report of 2.5%. While the Employment-to-Applicant Ratio has increased to 1.34 vs the predicted 1.34, the ratio of Jobs to Applicants has decreased.

AP News reported on Thursday that risk sentiment remained negative following the US administration's announcement that it is sending Ukraine a new $275 million package of arms and other equipment to help Ukrainian rebels remove Russian soldiers from crucial areas of the south as winter approaches. The war-related news articles prevented the cross from achieving the necessary threshold of 95.00.

Going forward, the focus will remain on the monetary policy of the Bank of Japan (BOJ).

In order to accelerate inflationary pressures in Japan and protect the economy from the impact of external demand shocks, the BOJ has no choice but to maintain its ultra-dovish interest rate policy stance. Governor Haruhiko Kuroda of the Bank of Japan may also announce a stimulus package and a softer stance on policy rates.

Thursday, Japanese officials said that they want to unleash additional economic stimuli to stimulate demand. Finance Minister Shunichi Suzuki of Japan stated that a stimulus package would be determined upon the following day. Japan’s national broadcaster, NHK, reported that a stimulus package of more than JPY 29 trillion is in consideration.

On the Australian front, investors are diverting their attention to the Reserve Bank of Australia's (RBA) interest rate announcement next week. As inflationary pressures have risen to 7.3%, RBA Governor Philip Lowe may resume his 50 basis point (bps) rate hiking spell.