The Current State of AUD/JPY
- Positive Bias: AUD/JPY is trading with a positive bias during the Asian session.
- Fundamental Backdrop: Mixed fundamental backdrop warrants caution for bullish traders.
- Risk Appetite: China’s new stimulus measures and Fed’s policy easing boost risk appetite.
- RBA’s Stance: RBA’s hawkish stance acts as a tailwind for AUD/JPY.
- CPI Data: Australian CPI dropped in August, but core CPI remains above RBA’s target.
- BoJ Rate Hike: Bets for another BoJ rate hike in 2024 limit JPY losses.
Analysis of the Situation
The AUD/JPY cross is showing positive momentum in the Asian session, hovering near the 99.00 mark. However, the mixed fundamental backdrop calls for caution among bullish traders. The current market dynamics include:
Market Sentiment
The recent stimulus measures by China and expectations of a more aggressive policy easing by the Fed have boosted investor confidence and risk appetite. This has led to a decline in the safe-haven JPY and a rise in the risk-sensitive AUD.
RBA’s Policy Outlook
The RBA’s hawkish stance, emphasizing the need for restrictive policies until inflation reaches the target range, supports the AUD/JPY cross. Despite the drop in CPI data for August, the core CPI remains above the RBA’s target band, indicating no immediate need for rate cuts.
BoJ Rate Hike Expectations
Anticipation of another rate hike by the BoJ in 2024 limits JPY losses and acts as a barrier to further gains for the AUD/JPY pair.
Technical Analysis and Future Outlook
From a technical perspective, a sustained move above the 50-day Simple Moving Average (SMA) could trigger further bullish momentum. However, any upward movement is likely to face resistance near the 100.00 psychological level, marked by the 200-day SMA.
Upcoming Event
Investors are keenly awaiting the release of BoJ meeting minutes on Thursday, which, coupled with overall risk sentiment, will influence JPY demand and provide new direction to the AUD/JPY pair.
About the Economic Indicator
The Monthly Consumer Price Index (CPI) measures changes in the price of goods and services acquired by household consumers. A high YoY reading is bullish for the Australian Dollar (AUD), while a low reading is bearish. The indicator provides valuable insights into inflation trends and economic health.