The AUD/JPY pair is struggling to keep itself above 89.00 after a decent opening in the early Asian session. The risk barometer witnessed a decent response from buyers as soaring oil prices weighed heavily on the Japanese Yen.

Investors discounted the surprise announcement of the oil production cut by OPEC , made on weekend. Japan, being one of the leading importers of oil, witnessed intense selling pressure.

However, the Australian Dollar is getting volatile ahead of the release of the Caixin Manufacturing PMI data. The street is estimating a marginal rise in the economic data to 51.7 from the former release of 51.6. On Friday, official China’s Manufacturing PMI landed at 51.9, higher than the consensus of 51.5 but lower than the former release of 52.6.

It is worth noting that Australia is a leading trading partner of China and a higher Chinese Manufacturing PMI would also strengthen the Australian Dollar.

Going forward, volatility in the Australian Dollar is expected to remain high ahead of the interest rate decision by the Reserve Bank of Australia (RBA), which will be announced on Tuesday. Australian monthly inflation indicator has softened to 6.8% in the past two months from its peak of 8.4% recorded in December. Despite that, RBA Governor Philip Lowe is expected to hike rates further by 25 basis points (bps) to 3.80%.

There is no denying the fact that Australian inflation has softened firmly, however, the inflation rate is highly skewed from the desired inflation rate, which would force RBA policymakers to continue their tight monetary policy approach.