AUD/JPY defies previous day’s losses, trades around 83.00 level

• AUD/JPY trades at the 83.00 level, BoJ’s fiddle with short-term borrowing scheme.
• The latest pullback in the US treasury yields has resulted in an improvement in Yen.
• AUD/JPY will closely monitor RBA Ellis speech and Japan’s National CPI data.

AUD/JPY defies the previous day's losses and continues to trade positively around the 83.00 level on Thursday as investors put their hopes on the safe-haven, Yen. The pair is trading at 82.94 during early Asian hours.

On Wednesday, the pair suffered a blow after the Reserve Bank of Australia (RBA) warned of a margin hit from a low-interest-rate environment and mortgage competition. However, the market participants' reaction was not strong enough as it somewhat gets affected with wages data supported by Reserve Bank Governor Philip Lowe's dovish stance.

In the latest news, the Bank of Japan's (BoJ's) short-term borrowing scheme to support smaller lenders, affected by ultra-low interest rates, damaged term borrowing costs. It further complicated the central bank's plans to eventually ditch the easy monetary policy. So much so, Tokyo's currency market is squeezed due to this fiddly balancing act.

As per a Reuters report, "the core of the BoJ's monetary policy seems to be wavering. The central bank must decide what it's going to prioritise."

Stakeholders of the safe-haven, Yen, will be hopeful towards Japan's COVID-19 fiscal stimulus package. The aid worth 40 trillion yen ($350 billion) is expected to revive the pandemic and oil price-hit economy. Investors will note that Japan's has overcome previous vaccine hesitancy and has achieved the highest inoculation rate in the Group of Seven (G7) without any mandates.

It is worth mentioning that the latest pullback in the US treasury yields has pushed the USD/JPY southwards, resulting in an improvement in the local currency Yen. The USD/JPY is reeling under pressure caused by declining US inflation pressures and rising rate hike expectations.

The risk-barometer pair is likely to witness some movements post multiple announcements coming from Japan and Australia. These announcements include a speech by Reserve Bank of Australia (RBA) Assistant Governor Luci Ellis and Japan's National Consumer Price release.

AUD/JPY technical levels