AUD/JPY flies beyond 80.00, pricing out RBA cuts

By FXStreet AUD/JPY has re-taken a major level at 80.00, last exchanging hands at 80.15/20 day highs, following the publication of the RBA minutes, which caused a major withdraw of liquidity by market makers.

RBA minutes: Market overpricing further cuts?

The minutes of the May 3rd meeting, when rates were cut by 25bp to 1.75%, were not as dovish as expected, with the Central Bank minutes revealing that “members discussed the merits of leaving interest rates on hold but decided on balance that a cut would help return inflation to target over time.”

RBA added that “although the March quarter outcome for the CPI reflected some temporary factors, the broad-based softness in prices and labour costs signalled less momentum in domestic inflationary pressures than had previously been expected.”

The market is currently pricing out what may have been an overly aggressive view on the RBA, given their more slightly reserved tone on cutting rates, which suggests a potential more cautious approach towards cutting rates again, barring further deterioration of inflation expectations or key economic indicators such as GDP, employment, business confidence, etc.

AUD/JPY key levels

On the upside, 80.40/0 s the next resistance level (horizontal level + mid round number), followed by 80.70 May 10 high ahead …read more

Source:: FX Street