AUD/JPY scales above 94.00 ahead of RBA and BOJ meeting minutes

• AUD/JPY has crossed the critical hurdle of 94.00 as RBA and BOJ’s minutes will highlight the policy divergence.
• The major contribution of costly oil and food prices in the entire inflation is restricting BOJ to sound hawkish.
• Japan’s economy wants a less attractive yen to keep higher exports intact.

The AUD/JPY pair has given an upside break of the consolidation formed in a 93.81-93.94 range in early Tokyo. An upside break of the narrow range has pushed the risk barometer above the critical resistance of 94.00. The cross is expected to perform stronger in today’s session as the release of the meeting minutes by the Reserve Bank of Australia (RBA) and the Bank of Japan (BOJ) will highlight a policy divergence between the economies.

The RBA raised its interest rates by 50 basis points (bps) in the first week of June as soaring price pressures demanded extreme policy tightening measures. The central bank went beyond the 25 bps rate hike option despite lower employment generation capacity. However, the labor statistics added 60.6k jobs in May, which was released after the RBA’s policy announcement. The RBA minutes are going to provide more insights into the monetary policy action and views of other policymakers on the economy and policy rates.

On the Tokyo front, a continuation of an ultra-loose monetary policy by the BOJ has put the yen bulls on the tenterhooks. The BOJ is focused on keeping its currency less attractive as it will result in higher exports for the economy. Also, the Consumer Price Index (CPI) in the Japanese economy is majorly contributed by advancing oil and commodity prices, which is restricting the BOJ to sound hawkish in its monetary policy dictation.