AUD/JPY jumps 15 pips as Australia's GDP beats estimates

The bid tone around the Aussie dollar strengthened, pushing AUD/JPY higher by 15 pips to 83.66 after Australia reported an upbeat Gross Domestic Product data for the fourth quarter of 2020. 

The economy expanded 3.1% quarter-on-quarter in the final three months of 2020, beating the estimated drop in the growth rate to 2.5% from the third quarter's reading of 3.4%. In annualized terms, the economy contracted 1.1% versus -1.8% expected and -3.8% previous.

So far, however, the gains in the AUD/JPY have been tepid at best. Possibly keeping aggressive buyers at bay is the warning from Australia's Treasurer Josh Frydenberg that unprecedented global stimulus launched to counter the coronavirus-induced economic slowdown is creating financial stability risks that will only intensify when interest rates inevitably rise.

Frydenberg also defended tough new foreign investment rules that have led to a collapse in Chinese investment, and supported the idea of withdrawing stimulus with the economy showing signs of life. 

An early tapering of the stimulus across the globe will likely weigh over the risk assets, including the AUD, and strengthen the haven bid for the US dollar. 

However, the Reserve Bank of Australia (RBA) said on Tuesday that interest rates will remain low until 2024, and the bank may do more if needed to stem the rise in government bond yields. 

As for the next few hours, vaccine optimism could keep the risk assets better bid. The US President Biden announced early today that there would be enough doses of the coronavirus vaccine available for the entire adult population by the end of May. The Caixin China Services PMI due in an hour could also influence the demand for the Aussie dollar. 

Technical levels