AUD/JPY weakens below 98.00 as BoJ holds interest rate steady at 0.5%

• AUD/JPY declines to around 97.80 in Friday's Asian session. 
• The BoJ left policy settings unchanged at its September meeting on Thursday.
• Australia's Unemployment Rate steadied in August, but labor markets are showing signs of softness. 

The AUD/JPY cross loses ground to near 97.80 during the Asian trading hours on Friday. The Japanese Yen (JPY) strengthens against the Australian Dollar (AUD) after the Bank of Japan (BoJ) interest rate decision. The attention will shift to the BoJ Press Conference later on Friday. 

The BoJ decided to keep the short-term interest rate target unchanged in the range of 0.40%-0.50% at its September meeting on Friday. The decision aligned with the market expectations. The JPY attracts some buyers in an immediate reaction to the rate decision. The Japanese central bank extended the pause in its rate-hiking cycle into the fifth consecutive policy meeting in a row after delivering a 25 basis points (bps) hike in January.

BoJ's policy statement noted that Japan's economic growth is likely to slow due to the impact of trade policies on global growth but will re-accelerate. Furthermore, Japan's underlying inflation is expected to stagnate due to a slowdown in economic growth, but gradually accelerate thereafter

Australia's labor market shows signs of cooling with a surprise fall in employment, raising the case for more Reserve Bank of Australia (RBA) interest rate cuts. This, in turn, could weigh on the Aussie against the JPY. Although the Unemployment Rate steadied at 4.2% in August, the Australian Employment Change arrived at -5.4K in August from 26.5K in July (revised from 24.5K). This figure came in below the market consensus of 22K.