AUD/JPY climbs above 96.50 as BoJ leaves interest rate unchanged in December

• AUD/JPY attracts some buyers to near 96.70 in Thursday's Asian session, up 0.40% on the day. 
• BoJ kept its policy unchanged at its December meeting on Thursday. 
• The RBA dovish expectations might cap the upside for the cross. 

The AUD/JPY cross drifts higher to around 96.70, snapping the two-day losing streak during the Asian trading hours on Thursday. The Japanese Yen (JPY) weakens after the Bank of Japan (BoJ) policy announcements. 

As widely expected, the BoJ kept the short-term policy rate target steady in the range of 0.15%-0.25% following a two-day policy meeting that ended Thursday. According to the summary of the BoJ policy statement, Japan's economy is recovering modestly, but with certain vulnerabilities. Inflation expectations are increasing modestly. However, uncertainty over Japan's economic and pricing future remains strong.

The Japanese central bank will examine whether the current wage hike momentum in Japan continues into next year, as some smaller firms have struggled to pass on higher costs to consumers. Later on Thursday, investors will closely monitor the BoJ Governor Kazuo Ueda's speech for fresh impetus. 

On the other hand, the rising bets that the Reserve Bank of Australia (RBA) will cut interest rates sooner than expected might weigh on the Aussie. Gareth Aird, head of Australian economics at CBA, predicted a February RBA rate cut as the central bank had made an "unambiguous shift in the dovish direction."