AUD/JPY on the bids near 77.00 after RBA’s SoMP

  • RBA cuts inflation and growth forecast.
  • The central bank emphasizes on employment data.

AUD/JPY is taking the round near 77.00 after RBA’s quarterly statement on monetary policy (SoMP) released on early Friday.

The Reserve Bank of Australia (RBA) said that lower jobless rate "achievable" given subdued inflation while the central bank will keep paying close attention to labor market data.

The Australian central bank cuts GDP forecast for June 2019 by 0.75% to 1.75% while announcing 2.75% growth expectations for the period ending on December 2019 and December 2020.

The RBA also trimmed inflation projections to 1.5% for June 2019, 1.75% for December 2019 and 2.0% for 2020 and the year 2021.

The central bank also said that some indicators from China have been positive.

Recently conveyed minutes of the Bank of Japan’s (BOJ) April meeting said that the Japanese economy may slide back into recession and added further strength into the safe-haven demand of the Japanese Yen.

Doubts surrounding the successful trade deal between the US and China have been weighing on market risk off-late. Global barometer to risk-tone, 10-year US treasury yields slipped 3 basis points to 2.45% on Thursday but remained mostly unchanged since morning.

As per the latest headlines, the US and Chinese lawmakers recently took a break after the initial round of trade talks and will resume the meeting tomorrow.

With the release of RBA statement already done and US-China trades held up till tomorrow, investors may now observe risk sentiment in order to determine near-term trade direction.

Technical Analysis

Not only yesterday’s low near 76.30 but 76.00 and 75.40/30 could also question bears while extended downturn might not hesitate to flash 74.50 and 72.40 mark including June 2016 low.

On the upside, 77.10 may offer an immediate resistance, a break of which highlights an area comprising low since mid-January and a descending trend-line since April 18 near 77.45/55. Also, a sustained trading above 77.55 can propel prices to 78.20 and 100-day simple moving average (SMA) around 78.65.

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