AUD/JPY jumps above 50-DMA, yield spread stagnant

AUD/JPY took out 50-DMA level of 87.60 and rose to a high of 87.78 on the back of the upbeat NAB business confidence number and hawkish comments from NAB's Chief Economist.

The bid tone around the Aussie dollar strengthened as the NAB Business confidence rose by 2 points to stand at +7. The index of business conditions stayed at +14 in September, almost triple its long-run average of +5.

The Aussie was also pushed higher by NAB group chief economist Alan Oster's comments that the RBA could be ready to raise interest rates in the second half of 2018.

However, the Aussie-Japan 10-year bond yield spread has not moved. It stays unchanged on the day at 277 basis points and well below the recent high of 281 basis points. Thus, the AUD/JPY rally could be short lived.

AUD/JPY Technical Levels

The cross was last seen trading around 87.66 levels. A break above 87.82 (5-DMA) would open up upside towards 88.10 (1-hour 200-MA) and 88.21 (weekly 5-MA). On the downside, breach of support at 87.60 (50-DMA) could yield a sell-off to 87.28 (previous day's low) and 87.00 (psychological level).