AUD/JPY extends its upside above 99.90 on upbeat Australian data, BoJ’s cautious stance

The AUD/JPY cross extends its upside to two-week peaks around 99.92 on Thursday during the early European session. The dovish stance from the Bank of Japan (BoJ) at its March meeting and the lack of any guidance about future policy steps exert some selling pressure on the Japanese Yen (JPY). Australia’s Trade Balance for March will be released on Friday for fresh impetus. 

The BoJ’s first interest rate hike in 17 years failed to boost the JPY as the rates in Japan remain much lower than the rest of the world. Furthermore, the expectations that the Japanese central bank will go slow in any further rate hikes and the lack of any guidance about the pace of policy normalization, weigh on the safe-haven JPY against the Australian Dollar (AUD) and create a tailwind for the AUD/JPY cross. 

On the Aussie front, business activity in Australia improved further in March. The final reading of Australia's Judo Bank Services PMI rose to 54.4 in March from the previous reading of 53.5, while the Composite PMI figure climbed to 53.3 in March versus 52.4 prior. The upbeat data provides some support to the AUD amid a positive tone around the equity markets on Thursday. On the other hand, the upside of the AUD/JPY cross might be limited due to the higher possibility that the Japanese authorities will intervene in the foreign exchange (FX) market to prevent the depreciation of the JPY.