- AUD/JPY is likely to find a cushion around 90.50 amid rising volatility in the Japanese Yen.
- A spike in Covid infections in China might worsen supply chain bottlenecks further.
- The BOJ has cleared that the central bank is not ditching the ultra-loose policy.
The AUD/JPY pair is sensing a halt in the corrective move to near 90.50 in the early Asian session. Earlier, the risk barometer slipped gradually after failing to extend its upside journey above the crucial resistance of 91.00. The cross is expected to deliver a recovery move as the expression of the continuation of the accommodative stance by the Bank of Japan (BOJ) has triggered volatility for the Japanese yen.
Meanwhile, the AUD/USD is showing signs of loss in the downside momentum and a similar kind of expectation is from the AUD/JPY pair.
The Australian Dollar is likely to display complicated moves as various countries are levying Covid safety measures for travelers from China. Covid infections have spiked dramatically in China after the rollback of lockdown restrictions and the reopening of the economy at a sheer pace. Health officials in the United States cited that the economy will impose mandatory COVID-19 tests on travelers from China.
The Chinese economy has already dismantled quarantine rules for inbound travelers. The staff of hospitals is describing the current time as the busiest period of their lifetime citing a sharp rise in Covid-19 cases. The rationale behind the reopening of the economy was to ease supply chain disruptions, however, it seems that the sheer pace of the economy’s reopening has worsened supply chain bottlenecks.
On the Tokyo front, the BOJ cleared that widening of the yield band was meant to address distortion in the 10-year Japanese Government Bonds (JGBs) pricing and this is not a step toward an exit from ultra-accommodative policy, as reported by Reuters. This might result in further weakness in the Japanese yen ahead.