AUD/JPY plummets to fresh 5-month low on RBA minutes, Aussie housing price data

RBA minutes keep highlighting fears of another rate cut.
Sluggish Aussie house price data adds weakness into the Australian Dollar (AUD).
Risk events remain on the spotlight.

Anil Panchal FXStreet

With the RBA minutes signaling likely monetary easing while going forward and Australian house price index lagging behind market consensus, the AUD/JPY pair slumped more than 20 pips to a fresh 5-month low near 74.20 during early Tuesday.

In its minutes of the June 04 meeting, the Reserve Bank of Australia (RBA) statement said that the board agreed "more likely than not" further policy easing would be appropriate. While considering the latest higher than expected Aussie unemployment rate statement like, “labor market would be "particularly important" on deciding further easing” further spread the pessimism.

Additionally, Australia’s first quarter (Q1) 2019 house price index fall behind -1.6% market consensus and -2.4% prior to -3.0%.

It should also be noted that China's May month house price index, released simultaneously, remained unchanged at 10.7%.

During early-day geopolitical tussle between the US and Iran coupled with the US-China trade tension has also contributed positively to the demand of the Japanese Yen (JPY).

As per the latest news, the US sent additional troops to safeguard against growing calls of a war with Iran whereas downbeat comments from the US Trade Secretary Wilbur Ross questions likeliness of any positive outcome of the G20 meeting between the US and Chinese leaders.

However, Japan’s Finance Minister Taro Aso was recently quoted saying that the US and China will meet during the G20 meeting in Osaka, Japan on June 28-29.

Global risk barometer the US 10-year treasury yields remain modestly flat near 2.085% by the press time.

Having witnessed early-day news/events, investors are more likely to emphasize on developments surrounding the trade and geopolitical tension between the US-Iran and the US and China.

Technical Analysis

While early-June lows near 75.00 acts as immediate strong resistance, an upside clearance of which can trigger the quote’s rally towards June 10 high around 76.00 whereas 76.40 and 50-day simple moving average near 77.05 could entertain buyers afterward.

Alternatively, sustained downturn beneath 74.30 can drag the pair to 73.0 and then to the year 2016 low around 72.40.

Author

Anil Panchal

FXStreet

Anil Panchal has nearly 15 years of experience in tracking financial markets. With a keen interest in macroeconomics, Anil aptly tracks global news/updates and stays well-informed about the global financial moves and their implications.

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