• AUD/JPY swung between low-82.00 to low-83.00 ranges on Tuesday, buffeted by safe-haven flows and rising global commodity prices.
• Whilst the escalating Russia/Ukraine crisis will remain a key driver, Aussie traders will also watch upcoming WPI data on Wednesday.

AUD/JPY has been choppy on Tuesday, swinging between lows not far above 82.00 and session highs to the north of the 83.00 level. On the one hand, heightened geopolitical tensions as the Russia/Ukraine crisis continues to escalate has put pressure the pair as market participants seek haven assets such as the yen. On the other hand, geopolitical tensions are contributing to upwards pressure on global commodity prices, favouring the commodity export-dependent Aussie. At current levels in the 82.80s, the pair trades with on the day gains of just under 0.5%, as traders continue to monitor geopolitical developments ahead of the release of Q4 Australian Wage Price Index (WPI) figures during Wednesday’s Asia Pacific session.

The data, if hotter than expected, could encourage the RBA to pivot their policy guidance in a more hawkish direction at a faster pace. The RBA has only so far conceded that a first rate hike may come before the end of the year and emphasised that they are willing to be patient, implying any such hike would come towards the end of the year. Hot WPI figures might encourage that timeline to be brought forward, which could provide tailwinds for the Aussie. Otherwise, the data calendar is pretty sparse this week for AUD and JPY so geopolitics and risk appetite will remain in the driver’s seat.