AUD/JPY sees little action as RBA minutes stick to the script
- RBA minutes fail to elicit a reaction from Aussie dollar pairs.
- AUD/JPY remains vulnerable to risk-off moves in global equities.
AUD/JPY is barely moving in response to the Reserve Bank of Australia’s August policy minutes released soon before press time. The minutes did not offer hawkish or dovish surprises.
Ready to more
While the board saw no need to adjust policy on Aug. 6, it remained open to boosting stimulus if needed, the minutes revealed. The RBA cut interest rates to record lows earlier this year and launched a yield curve control program to counter the coronavirus-induced panic in the financial markets and recession fears.
The minutes reiterated the bank’s commitment to maintaining the target for three-year yields at 0.25% until progress is made toward full employment and inflation.
That the central bank intends to run ultra-accommodative policy for a prolonged time is generally accepted by now and priced in. As such, the minutes are struggling to elicit a reaction from the Aussie pairs. At press time. AUD/JPY is trading around 76.4 – a level seen ahead of the release of the minutes.
The Australian currency may face selling pressure during the day ahead if the deadlock in Washington over an additional stimulus package and lingering Sino-US tensions weigh over the equity markets. As of writing, the futures on the S&P 500 are flatlined.
Another factor that poses downside risks to the Aussie dollar is the resurgence of coronavirus cases. As per the latest reports, the Australian city of Sydney has been added to the COVID-19 hotspot list.