AUD/JPY remains steady near 93.00, downside appears due to hawkish tone surrounding BoJ

• AUD/JPY may face challenges due to the rising odds of further rate cuts by the RBA.
• RBA Governor Michele Bullock called the rate cut decision proactive and a confidence booster for an unstable economy.
• The Japanese Yen continues to gain ground as the BoJ Deputy Governor Shinichi Uchida delivers hawkish comments regarding rate hikes.

AUD/JPY remains steady and is holding ground near 92.80 during the Asian trading hours on Wednesday. The currency cross depreciated by more than 0.50% in the previous session following the interest rate cuts from the Reserve Bank of Australia (RBA) and the People's Bank of China (PBoC).

On Tuesday, the RBA delivered a 25 basis point rate cut, reducing its Official Cash Rate (OCR) from 4.1% to 3.85%. Moreover, the PBoC announced a reduction in its Loan Prime Rates (LPRs). The one-year LPR was lowered from 3.10% to 3.00%, while the five-year LPR was reduced from 3.60% to 3.50%.

The Aussie Dollar struggles as RBA Governor Michele Bullock stated that a rate cut by the central bank decision was a proactive move and boosted confidence that was suitable given the state of the economy. Bullock also mentioned that the Board is prepared to take additional action if necessary, raising the prospect of future changes.

The AUD was also affected against its peers by Australia's political unrest. Following the National Party's withdrawal from its collaboration with the Liberal Party, the opposition coalition disbanded. The ruling Labor Party, meanwhile, took advantage of the unrest and retook power with a more robust and expansive agenda.

The AUD/JPY cross may face downward momentum as the Japanese Yen (JPY) continues to attract buyers following the hawkish comments from the Bank of Japan (BoJ) Deputy Governor Shinichi Uchida earlier this week has raised the odds for further policy tightening by the central bank amid fears of broader and more entrenched price increases in Japan.

Apart from this, renewed US-China trade tensions revive safe-haven demand and provide an additional boost to the JPY. On Wednesday, China's Commerce Ministry stated that US measures on China's advanced chips are 'typical of unilateral bullying and protectionism.' Chinese authorities are looking further into whether the United States is serious about correcting its erroneous practices.