• AUD/JPY advances on a risk-on impulse, despite high US inflation.
• Wednesday’s BoJ’s Kuroda dovish commentary weighed on the JPY.
• AUD/JPY’s fall capped at the 200-day EMA at 90.75, from which the pair rallied to 92.83, the day’s high.

The AUD/JPY extends its gains on Thursdays, following the release of US economic data, which initially weighed on most G8 currencies but the greenback, but a risk-on impulse, propelled risk-perceived currencies, namely the Australian dollar. Therefore, the AUD/JPY is trading at 92.68, above its opening price by 0.56%,

US equity indices are set to finish the session with more than 2% gains each. Earlier, US inflation data was reported, with headline CPI rising by 8.2% YoY, less than estimates. The so-called core CPI, which excludes volatile items, surprisingly jumped more than the 6.5% expected YoY, up by 6.6%. Therefore, market participants had priced in a ¾ percent Federal Reserve rate hike at November’s meeting.

The AUD/JPY dived on the news release but bounced off the lows, under 91.00, and staged a comeback above 92.50, a 150 pip rally.

Aside from this, the lack of Aussie economic data leaves AUD/JPY traders leaning on market sentiment dynamics, which favored the AUD/JPY upside. Earlier in the month, the Reserve Bank of Australia decided to raise rates by 25 bps when markets were expecting a 50 bps increase, perceived by a dovish hike, with market participants flying away from the AUD, seeking return.

On the Japanese front, Bank of Japan Governor Haruhiko Kuroda said that one-side moves in the yen driven by speculation are bad for the economy. Kuroda noted “Yen depreciation may have a good impact on the macroeconomy as a whole, but there are some sectors which are suffering.”

Furthermore, Kuroda commented that the BoJ would continue its monetary easing program to achieve the inflation 2% target in a stable and sustained manner.

All that said, the RBA’s dovish hike, and BoJ’s dovish stance, would likely bolster the AUD/JPY. So traders should expect further AUD appreciation after achieving the bearish-flag pattern target, opening the door for further gains.

Next, the Japanese economic calendar will feature M2 Money Supply, while the Aussie’s docket is empty. AUD/JPY traders should also be aware of China’s calendar, which will feature PPI, CPI, and its Trade Balance.

Also read: AUD/JPY Price Analysis: Retraces from around 92.30s on dampened mood

AUD/JPY Key Technical Levels