AUD/JPY falls below 94.00 despite firmer rates, Australia's employment report, and Japan's anticipated intervention

AUD/JPY retests its intraday low near 93.90 while extending the previous day's losses at the start of Thursday's trading in Asia. Thus, the cross-currency pair reflects the market's caution and the pair trader's nervousness ahead of Australia's monthly employment report and the People's Bank of China (PBOC) monetary policy meeting.

Notable is the return of the risk-averse sentiment on Wednesday, which combined with the Japanese officials' verbal assault on the dramatic fall of the yen to weigh on the AUD/JPY exchange rate. Also favoring the first decline in three days were reports indicating a push towards policy change by the Bank of Japan (BOJ) and diminished chances favoring the Reserve Bank of Australia (RBA). Thus, the cross-currency pair disregarded the bond market sell-off.

US 10-year Treasury yields reestablished a 14-year high above 4% as market participants flocked to risk-safety after the risk-on mood inspired by the United Kingdom waned in the wake of resurgent fears of recession prompted by the aggressive stances of central bankers despite economic slowdown concerns. The pricing pressures in Britain, the Eurozone, and Canada were all at or around multi-month highs, and the core numbers and services inflation were robust enough to push central banks towards raising interest rates.

China-related news contributed to a risk-averse sentiment and weighed on AUD/JPY pricing. According to Nikkei, the dragon nation's covid numbers reached a four-month high, while the United States' willingness to partner with Taiwan to co-produce American weaponry exacerbates Sino-American tensions. Given Australia's ties with China's second-largest economy, any negativity emanating from China are detrimental to Australia.

Wall Street closed in the red for the first time in three days, while S&P 500 Futures also posted modest losses as of press time.

In addition to Japan's possible market intervention to preserve the yen, the Australian employment report and the PBOC will be crucial to monitor. Australia's Employment Change is anticipated to be 25K, compared to 33.5K previously, while the Unemployment Rate remains unchanged at 3.5%. In addition, the PBOC is likely to maintain its existing monetary policy, with the benchmark rate remaining at 3.65%.

In conclusion, AUD/JPY may have a short-term improvement due to stronger data, but Japan's intervention and negative sentiment may weigh on prices.