AUD/JPY remains on the back foot around 74.50 after RBA minutes


  • AUD/JPY fades bounce off intraday low of 74.30 after bearish RBA minutes.
  • RBA’s Kent says will not increase cash rate until actual inflation is sustainably in the 2-3% target range.
  • Risk sentiment recovers as US Senate Majority Leader McConnell cited votes on stimulus package during this week.
  • PBOC Interest Rate Decision, risk catalysts will offer immediate direction.

AUD/JPY wobbles around 74.50 after RBA released minutes of the recent monetary policy on early Tuesday. In doing so, the pair marks a seventh consecutive negative performance as traders in Tokyo settles during the initial hours of the market opening.

As per the minutes of the October meeting, “the board agreed to maintain highly accommodative policy settings as long as required.”

Read: RBA Minutes: Discussed the options of reducing the targets for the cash rate and the 3-year yield towards zero, without going negative

Earlier in the day, RBA Assistant Governor (Financial Markets) Christopher Kent joined the league of Governor Philip Lowe while marking his bearish bias. The policymaker cited economic pessimism and high unemployment levels as the main causes to favor further monetary easing.

Read: RBA’s Kent: Expansion of balance sheet adding monetary stimulus

With the bearish sentiment at the Aussie central bank, AUD/JPY ignores recently positive risk barometer, namely the S&P 500 Futures, up 0.60% to 3,442. While news feed seems mostly dead, US Congress members’ push for the coronavirus (COVID-19) stimulus likely to have helped the trading sentiment.

Recently, Senate Majority Leader Mitch McConnell struck an upbeat tone to have the much-awaited deal ready for the vote during the week. The comments seem to ignore the Republican-Democratic divide on many issues that have stopped the relief package since the start.

Other than the US stimulus, hopes of a soft Brexit, mainly due to the European Union’s (EU) refrain from leaving the negotiation table, also favor the recent shift in the market’s mood.

However, the COVID-19 woes stand tall to challenge the global economic recovery while the other key risk catalysts, like Brexit and US stimulus updates, suggest no clear outcome. As a result, the bears are likely to keep the reins due to its nature of portraying the risk tone

Looking forward, the Interest Rate decision by the People’s Bank of China (PBOC), up at 01:30 GMT, will be the next directive for the AUD/JPY prices. Bloomberg recently came out with the forecast, relying on the Chinese Securities General, while citing increasing odds of higher reverse repo operations by the Chinese central bank. Even so, major forecasts suggest no changes to 3.85% rate.

Technical analysis

Not only the failures to cross the 61.8% Fibonacci retracement of its June-August upside but bearish MACD conditions also direct AUD/JPY sellers to attack a four-month-old upward sloping trend line, at 74.32 now. Alternatively, an upside clearance of 61.8% Fibonacci retracement level, at 74.80, will find multiple barriers around 75.00 portrayed during the early-October.

Additional important levels

Overview
Today last price 74.5
Today Daily Change -0.11
Today Daily Change % -0.15%
Today daily open 74.61
 
Trends
Daily SMA20 75.25
Daily SMA50 76.18
Daily SMA100 75.51
Daily SMA200 72.86
 
Levels
Previous Daily High 74.95
Previous Daily Low 74.41
Previous Weekly High 76.52
Previous Weekly Low 74.26
Previous Monthly High 78.36
Previous Monthly Low 73.97
Daily Fibonacci 38.2% 74.62
Daily Fibonacci 61.8% 74.75
Daily Pivot Point S1 74.37
Daily Pivot Point S2 74.12
Daily Pivot Point S3 73.82
Daily Pivot Point R1 74.91
Daily Pivot Point R2 75.2
Daily Pivot Point R3 75.45

 

 

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