Is upside in AUD/JPY capped by increased odds of delay in RBA rate hike?

  • NAB business conditions index hit a record high, while confidence index dropped slightly. 
  • AUD/JPY sees little action - upside possibly capped by NAB's view that RBA may delay rate rises until early 2019. 
  • Also,  Wall Street shares lost steam, capping gains in the AUD. 

The Aussie dollar is finding it hard to cheer the rise in the NAB business conditions index to record highs in February, possibly due to increased odds of a delay in the RBA interest rate hike. 

The AUD/JPY was last seen trading in a sideways manner around 83.80, having hit a low of 83.63 earlier today. 

The National Australia Bank (NAB) now believes there is a risk that RBA will delay rate rises until early 2019 as opposed to the previous expectation that RBA would deliver the first rate hike in the second half of the year. The change in language on RBA liftoff timing seems to have overshadowed the rise in the business conditions index. 

Further, the MSCI's broadest index of Asia-Pacific shares outside Japan inched down 0.05 percent, tracking the decline in the US stocks. The soft tone of the equities (risk assets) could be doing its bit to cap upside in the AUD. Meanwhile, other Aussie data releases (Australia home loans growth, investment lending) offered little reason for AUD bulls to make their presence felt. 

AUD/JPY Technical Levels

A break above 84.10 (previous day's high) would allow a stronger rally to 84.86 (Feb. 21 high) and 85.00 (psychological level). On the downside, the violation at 83.66 (100-hour moving average) could yield a sell-off to 83.19 (100-hour MA) and 83.00 (zero levels). 

 

 

 

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