AUD/JPY ignores dovish RBA minutes, trades near 78.50

AUD/JPY turned a blind eye toward the minutes of the Reserve Bank of Australia's (RBA) December monetary policy meeting on Tuesday and remained bid in the 78.50 neighborhood. 

The minutes said the policymakers were ready to do more (easing) if needed and were in favor of keeping rates low at least for three years. While policymakers acknowledged the faster-than-expected recovery in the labor market, they stressed that "substantial tightening" in the labor market was needed to lift wage growth and inflation. 

So far, however, the dovish tone has failed to entice sellers, as the minutes offered little or no surprises. The central bank cut rates and the three-year yield target to 0.1% in November and has time and again expressed a willingness to boost easing if required. 

Besides, there is little reason for the AUD sellers to chip in, as the futures tied to the S&P 500 traded in the green. The pair could extend gains if China Industrial Production data beats estimates, boosting commodities, and commodity dollars. 

However, if prospects of hard lockdown in the US unsettle equity markets, the AUD will likely come under pressure. Germany, the Eurozone's largest economy, has already announced an economically-painful hard lockdown. That said, expectations for a swift global economic recovery in 2021 on the back of potential coronavirus vaccines are likely to restrict losses in the AUD and other risk assets.

Technical levels