- AUD/JPY extends pullback from after RBA’s minutes portray the board’s dovish outlook.
- Trade/political pessimism surrounding the US and China also exert downside pressure.
- News keeps the driver’s seat amid fewer catalysts on the economic calendar.
With the RBA’s latest monetary policy meeting minutes reiterating the board’s dovish bias, AUD/JPY drops further towards the multi-week-old rising support line while taking rounds to 73.62 during early Tuesday.
The Reserve Bank of Australia (RBA), in its minutes statement of the November month monetary policy meeting, said that the board is prepared to ease policy further if needed and the case could be made for a rate cut at November meeting. It was also mentioned that policymakers agreed that an extended period of low interest rates would be required to meet targets.
Read: RBA minutes: Board prepared to ease policy further if needed (AUD lower)
In a reaction, the AUD/JPY pair dropped to the intra-day low while extending its previous pullback towards an ascending trend line since August 26.
Traders ignored the latest comments from the Bank of Japan’s (BOJ) Governor Haruhiko Kuroda who placed high importance on the powerful monetary easing.
The quote was earlier bearing the burden of the trade uncertainty between the United States (US) and China. Headlines via CNBC recently quoted Chinese diplomats being less optimistic about the trade deal with the US as President Donald Trump refrains from rolling back the tariffs. It should also be noted that the current tension surrounding the Hong Kong protests also negatively affects the odds of a successful trade deal as the dragon nation dislikes the US intervention into their “One Country, Two Systems”.
Risk-tone seems a bit heavier recently with the US 10-year Treasury yields losing one basis point (bp) to 1.8% and the S&P 500 Futures losing 0.17% by the press time.
Given the lack of major data/events up for publishing on the economic calendar, traders will keep eyes on the trade/political headlines for fresh direction.
Technical Analysis
Should prices break near-term key support line, at 73.43 now, also decline below monthly lows near 73.35, bears can target 73.00 and early-October lows near 72.55. Alternatively, the 21-day Exponential Moving Average (EMA) level near 74.26 could act as an immediate upside barrier holding the key for the pair’s recovery to 75.00 and then to monthly high near 75.70.
Share
