AUD/JPY turns positive after RBA cheers higher commodity prices

Reserve Bank of Australia (RBA) kept key policy tools unchanged, but said higher commodity prices have supported a rise in the trade surplus. 

The positive comments strengthened the bid tone around the Aussie dollar, thus the AUD/JPY cross jumped to a session high of 85.85 levels. The bank did state that the inflation is expected to remain low for some time; however, such comments were expected by the markets. 

Furthermore, the bank did not sound seriously concerned by the strength in the Aussie dollar. Overall, the policy did not offer any dovish surprise, thus there is little reason for markets to sell the Aussie dollar. 

Meanwhile, the uptick in the USD/JPY pair further strengthens the bullish tone around the AUD/JPY cross. 

AUD/JPY Technical Levels

The cross printed a low of 85.24 and was last seen trading around the session high of 85.85. A break below 85.00 (zero figure + 23.6% of Trump rally) could yield a sell-off to 84.65 (Dec 19 low) and to 84.55 (Jan 5 low). On the other hand, a break above the 10-DMA level of 86.00 would open doors for a re-test of 86.49 (previous day’s high), above which a major hurdle is seen at 86.73 (Feb 3 high).