- The Aussie dollar jumps 20 pips on RBA’s decision to keep rates unchanged.
- Risks for AUD/JPY remains skewed to the upside, courtesy of improved risk appetite.
- The RBA, however, is expected to cut rates in November and that may cap gains.
The bid tone around the Aussie dollar strengthened, pushing AUD/JPY higher from 75.94 to 76.14 after the Reserve Bank of Australia kept key policy tools unchanged.
The central bank maintained the benchmark lending rate, and the three-yield bond yield target unchanged at 0.25% in October as expected.
The policy statement said the economy would take some time to return to end-2019 levels, and the policy will remain highly accommodative as long as needed. It added that controlling the high jobless rate is an important national priority.
The central bank, however, foresees the jobless rate to peak at lower rates than previously forecasted.
The Aussie dollar has spiked on the status quo RBA decision and may extend gains as the futures tied to the S&P 500 are signaling “risk-on” with a 0.23% gain.
However, the central bank is still expected to cut rates to a new record low of 0.10% next month. As such, significant gains in AUD/JPY may remain elusive. The pair is currently trading at 76.02, representing a 0.21% gain on the day.
Technical levels
Resistance: 76.74 (61.8% Fib retracement of September drop), 77.00 (psychological level).
Support: 75.81 (session low), 75.35 (Monday’s low).
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