AUD/JPY keeps losses as RBA's Lowe says ready to step up QE if required

  • AUD/JPY remains on the defensive following dovish comments by RBA's Lowe. 
  • Governor Lowe said the bank remains ready to boost bond purchases if needed. 
  • The US-China trade tension and the resulting risk-off weigh over the AUD in early Asia. 

Reserve Bank of Australia's (RBA) governor Lowe was out on the wires a few minutes before press time expressing willingness to do more, if required. 

"The bank remains prepared to scale up bond purchases if necessary," Lowe said while adding that there is a limit to what can be achieved with monetary policy and called fiscal policy crucial. 

The central bank's willingness to boost bond purchases could bolster bearish pressures around the Aussie dollar. The AUD/JPY pair is currently trading in the red near 70.60, having hit a low of 70.50 soon before press time.

The pair ran into offers near 71.00 early Thursday after the US stock futures fell, weakening the demand for the growth-linked currencies like the Aussie dollar. The RBA skipped bond purchases for the ninth straight day on Thursday, but that news failed to put a bid under the Aussie dollar. 

Moreover, escalating tensions between the US and China and renewed fears of the second wave of coronavirus look to be weighing over the AUD. President Trump accused China of running a massive disinformation campaign and allowing the coronavirus to spread across the globe. 

Meanwhile, repeated warnings from the World Health Organization (WHO) and other medical bodies regarding a possible surge in coronavirus cases due to relaxing of social distancing measures have poured cold water over the optimism generated by major nations' plans to reopen economies. 

Technical levels

    1. R3 71.99
    2. R2 71.51
    3. R1 71.23
  1. PP 70.75
    1. S1 70.47
    2. S2 69.99
    3. S3 69.7


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