- AUD/JPY shows little reaction to the RBA’s Kent’s speech.
- Risk catalysts like Hong Kong protest, updates from Argentinean politics and US-China trade developments dominate market sentiment.
- Second-tier data from Australia and Japan will provide fresh impulse.
AUD/JPY failed to move much despite a speech from the RBA’s Assistance Governor as it seesaws around 71.10 during early Tuesday.
The Reserve Bank of Australia’s (RBA) Assistant Governor (Financial Markets) Christopher Kent recently appeared for a speech at the Finance and Treasury Association Breakfast in Sydney on The Usual Transmission – Monetary Policy and Financial Conditions.
Read: RBA Kent: We are inflation targeters, unlikely to need negative rates in Australia.
The RBA policymaker praised the central bank’s lower rate policy that helps them witness record low bank funding costs. He further mentioned that the RBA isn’t targeting the unemployment rate with the policy.
The Australian Dollar (AUD) didn’t move much on the news as traders might be waiting for the question and answer session for further details.
Given the recently dovish rhetoric by the RBA’s quarterly monetary policy report and downbeat comments from the Governor Philip Lowe, Mr. Kent’s statements are likely to weigh further onto the Aussie if answers to audience questions show the central bank’s bearish bias.
Though, investors will keep an eye on the July month data for National Australia Bank’s (NAB) Business Confidence/Condition survey results for Australia for immediate direction. Also on the traders’ radar will be Japan’s July month Domestic Corporate Goods Price Index and Machine Tool Orders, coupled with the June month Territory Industry Index data.
It should also be noted that geopolitical tension in Hong Kong, due to 10-week old protests, trade news and primary election victory by the anti-market candidate in Argentina are some of the key risk catalysts that are supporting the Japanese Yen off-late.
Technical Analysis
An area comprising January lows and current month bottom near 70.74/70 can keep the downside limited, a break of which can drag the quote to 70.00 while August 08 high around 72.40 offers immediate resistance to the pair.
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