The AUD/JPY Rebounds to Near 93.00 Ahead of the RBA's Monetary Policy Statement

The AUD/JPY pair has recovered significantly following strong bids near 92.30. The risk barometer fell precipitously earlier this month in the aftermath of the Reserve Bank of Australia's (RBA) surprise rate hike on May 3.

RBA Governor Philip Lowe announced a 25 basis point (bps) rate raise to 0.35 percent, exceeding the initial prediction of 15 bps. The higher-than-expected rate hike was prompted by Australia's increasing inflation. Previously, the Australian Bureau of Statistics announced annual inflation in Australia at 5.1 percent, far higher than forecasts of 4.6 percent and the prior print of 3.5 percent. Price pressures have compelled the RBA to adopt a hawkish tone and include a rate hike in its policy statement. Investors will now be watching for the issuance of the RBA's monetary policy statement (MPS), which will detail the rationale for the rate hike decision. Additionally, it will provide an update on the present state of crucial economic indicators.

Meanwhile, the Japanese yen is underperforming following the conclusion of its pullback season. Bank of Japan's (BOJ) ultra-loose monetary policy will continue to torment yen bulls. The BOJ is projected to provide additional assistance in the future, as the Japanese economy has not yet recovered to pre-pandemic levels. Tokyo's Consumer Price Index (CPI) came in at 2.5 percent, far higher than the 1.9 percent expected and the 1.3 percent prior reading. This may compel the BOJ to adopt a more neutral tone.

AUD/JPY