AUD/JPY eyes RBA minutes, fresh 6-week high - a whisker away

The AUD/JPY pair remains bid around 84.45 levels in Asia and looks set to test fresh 6-week highs above 84.54 levels.

The Reserve Bank of Australia will release the minutes of their latest monetary policy meeting at 01:30 GMT. The minutes are likely to showcase increased worry about the risks to the housing market, labor market and household indebtedness. RBA’s concerns are valid as these factors could lead to a sharp drop in the consumption and derail the rebalancing process. The minutes are likely to reiterate the risk arising out of a strong Aussie dollar.

However, these things are well known to the markets and have been largely priced-in at least for the short-term. Markets do not expect the RBA to move for the rest of the year.  A change in the language of the minutes, either way, could trigger a big move in the Aussie pairs.

The upside move in the AUD/JPY pair could be exaggerated in the case of a hawkish surprise as the uptick in the oil prices could keep safe havens/funding currencies like the Japanese Yen under pressure.

AUD/JPY Technicals

A sharp recovery from the low of 82.68 seen on May 5 has been followed by a higher bottom formation. The bulls score another brownie point due to Monday’s bullish engulfing/bullish outside day candle. The RSI is neatly positioned above 50.00 levels.

A break above 84.54 (May 2 high) would open doors for 85.13 (100-DMA) and 85.77 (Mar 31 high). On the downside, support is seen at 84.34 (May 10 high) ahead of 83.82 (38.2% Fib Retracement of 76.78 - 88.18) and 83.61 (previous day’s low).