AUD/JPY skids below 92.00 despite hawkish RBA bets

The AUD/JPY pair has surrendered the majority of its gains recorded in the first hour of the Asian session. The risk barometer opened at 91.58, moved higher to an intraday high of 92.16 but slipped lower modestly to near its intraday low. The asset has been trading in a tad wider range after the Bank of Japan (BOJ) reported its monetary policy unchanged last week. The BOJ believes that its economy needs more stimulus to spurt the aggregate demand.

Japan’s central bank has been maintaining an ultra-loose monetary policy to achieve the growth rates of pre-pandemic levels. The BOJ has been facing the issues of weaker currency recently amid higher commodity prices. Elevated prices of crude oil, food prices, and base metals are going to result in widened fiscal deficit for the economy.  Higher energy bills and food prices have impacted strongly the households’ real income. The BOJ states that a weaker yen will ramp up the corporate profits, but it will also have some drastic effects on the economy.

Moving on to the Aussie front, the market participants are awaiting the interest rate decision announcement by the Reserve Bank of Australia (RBA) on Tuesday. Taking into account, the soaring inflation in the aussie area, the RBA is likely to consider mounting price pressures while drafting the rate decision. The street is expecting a rate hike by 15 basis points (bps), which will push its benchmark rates to 0.25%.