- RBA kept the interest rates unchanged at the record low of 1.5%.
- The AUD is reporting gains across the board with the two-year Aussie yield rising five basis points.
- AUD/JPY has added 46 pips and could soon rise above 78.00.
The bid tone around the Aussie dollar strengthened, pushing the AUD/JPY higher by 46 pips to a session high of 77.93 after the Reserve Bank of Australia (RBA) kept rates unchanged at a record low of 1.5%.
Australian cash rate futures had put the probability of a 25 basis point rate cut at today’s meeting at 47%, meaning the markets were divided on the prospects of a rate move.
So, traders positioned for a rate cut may be unwinding their Aussie shorts, creating upward pressure on the AUD/JPY cross.
The gains could be extended further, as the Australian two-year government bond yield, which closely tracks interest rate expectations, has jumped five basis points to 1.324%.
Also, traders may offer the anti-risk Japanese Yen if the equities pick up a strong bid, further strengthening the buying pressure around the AUD/JPY cross. As of writing, however, the futures on the S&P 500 index are reporting a 0.60% drop.
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