AUD/JPY off-highs, stuck in mid-88s ahead of RBA

The AUD//JPY pair failed to sustain at higher levels and quickly eroded nearly 30-pips over the last hours, as the bulls turn cautious ahead of the RBA policy decision.

AUD/JPY lifted by risk-on

The cross remains strongly bid, although retreated from three-day tops of 88.71, as markets overlooked upbeat Chinese manufacturing PMI numbers, in the wake of increased nervousness before the RBA event.

Markets widely expect the RBA to leave monetary policy settings unchanged, although jawboning the currency is not ruled out, in response to the recent appreciation in the Aussie. RBA to express its level of discomfort with AUD today - NAB

As a result, the Aussie surrendered gains partially, while a better bid Yen against its American rival, despite weaker Japanese manufacturing PMI report, adds to the renewed weakness seen in the cross.

Focus now shifts towards RBA monetary policy announcement for further momentum on the cross.

Technical Levels

Higher side: 88.71 (daily top), 89.00 (round number), 89.42 (multi-month tops)

Lower side: 88.18/13 (daily pivot/ 20-DMA), 87.50 (key support), 86.78 (Jul 13 low)