- AUD/JPY extends the latest declines after RBA minutes keep the risk of further rate cuts on cards.
- Doubts over the US-China trade relations weigh on the market’s risk tone.
- Trade/political headlines in the spotlight for now.
AUD/JPY stands on a slippery ground while trading around 75.30 Tuesday’s Asian session. That said, the Reserve Bank of Australia’s (RBA) minutes of the latest monetary policy meeting kept the risk of further rate cuts on the cards.
The RBA minutes added weakness into the Australian dollar (AUD) as it said that the RBA had the ability to add further stimulus if required, ready to ease again if needed.
Read more: RBA Minutes: Ready to ease again, economy has reached a gentel turning point
Risk tone recently got heavier on the South China Morning Post (SCMP) news that Chinese businesses and former diplomats doubt optimism surrounding the US-China trade relation despite phase-one. Also supporting the risk-off could be the threat of hard Brexit after the United Kingdom’s (UK) Prime Minister (PM) stays ready to put forward the bill to rule out any transition delay beyond 2020.
With this, the US 10-year treasury yields fail to extend the previous run-up, while taking rounds to 1.87%, whereas S&P 500 Futures also declines to 3,193 (-0.14%) by the time of writing.
The pair benefited from the improvement in the market’s risk sentiment on Monday. Global traders welcomed the news of a phase-one deal between the United States (US) and China. Further, news that the US will be able to doubt its export to China after the deal, as said by the US President Donald Trump’s Adviser Larry Kudlow, also increased the risk-on.
While no major data is up for publishing from either Australia or Japan, markets will keep eyes on trade/political news to determine near-term trade direction. Even so, traders may adopt cautious behavior ahead of Thursday that offers monetary policy meeting by the Bank of Japan (BOJ) and Australia’s employment data.
Technical Analysis
A daily closing beyond November high near 75.70 holds the key to pair’s fresh run-up towards 76.00 and July month top close to 76.30. On the contrary, 74.90/85, including 10-day Exponential Moving Average (EMA) and December 03 high, could keep immediate declines limited.
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