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  • AUD/JPY fails to hold onto the previous day’s gain on Thursday.
  • Risk sensitivity downplays the cross performance.
  • Yen gains on safe-haven appeal.

AUD/JPY price remains muted in the Asian session. The cross loses part of its previous day’s gain as market sentiment turns a bit edgy.

At the time of writing, the AUD/JPY cross is trading at 84.48, up 0.02% for the day.

The rebound in the US dollar reflects the shift in market dynamics. The precious metal retreated from the higher levels due to the overnight gains in the greenback. Gold slipped below the coveted $1,900 mark with 0.01% losses and Silver lost almost 1%.

Inflationary risk is riding the market sentiment causing investors to reduce their investment in riskier assets. Rising prices induce fear of the economy overheating,  which could lead central banks and governments to roll out the economic stimulus and lower interest rates.

The first in the series is the Reserve Bank of New Zealand (RBNZ), which hinted at the probable rate hike in September 2022.  

Market participants are now waiting for the release of US Personal Consumption Expenditure (PCE) data on Friday, the Fed gauge of inflationary pressure.  

If the data came in alignment with the market expectations, then it could spur the expectations of a sooner rate hike and could dampen the risk sentiment.

Meanwhile, Aussie is downbeat by the recent surge in corona cases in Victoria with the extended lockdown in the pipeline.

On the other hand, the yen gets the investor’s attention for its safe haven appeal. The Bank of Japan (BOJ) Monetary Policy Board member Hitoshi Suzuki said on Tuesday, the economy is likely to recover gradually as the service sector is expected to lower than that prior to the pandemic for the time being. The statement is aligned with BOJ Governor Haruhiko Kuroda’s repeated concerns over the downside risk in the economy.

Against this backdrop, it’s worth mentioning that S&P 500 Futures were trading at 4,192 down 0.02%.

In the light economic calendar, investors are gearing up for the release of Australia’s Private Capital Expenditure data.

AUD/JPY Additional Levels