AUD/JPY jumps to 92.00 on RBA rate hike, ignores hawkish BoJ concerns, Japan intervention news

• AUD/JPY adds to intraday gains even as RBA hiked rates by 0.25%.
• RBA matches market forecasts but fails to please hawks by expecting softer inflation.
• BoJ’s Kuroda struggles to push back hawkish bias, MoF Japan confirms market intervention.
• Sluggish sentiment also acts as an upside filter.

AUD/JPY takes the bids to refresh intraday high near 92.00. Reserve Bank of Australia (RBA) announced the fourth consecutive 0.25% hike in the benchmark interest rate early Tuesday. RBA matched the market forecasts and allowed the cross-currency pair to remain firmer for the second day.

As the move was widely priced-in and the Aussie central bank failed to offer any major hawkish clues, the AUD/JPY could not cheer the rate lift and cling to mild gains during a two-day uptrend. The RBA’s inability to please the pair buyers could be linked to the statements expecting softer inflation.

Also read: Breaking: RBA raises OCR by 25 bps to 3.35% in February, as expected

In addition to the RBA’s inability to please Aussie bulls, hawkish concerns surrounding the Bank of Japan’s (BoJ) next moves and Japan’s money market interventions seem to challenge the AUD/JPY bulls, despite the initial spike.

On Monday, Bank of Japan (BoJ) Governor Haruhiko Kuroda said that the central bank would seek to achieve 2% inflation in a stable, sustainable manner while keeping an eye out for side effects. Earlier in the week, chatters surrounding the BoJ Deputy Governor Masayoshi Amamiya’s selection as the next Japanese central bank leader and the hawkish results of the same seem to have teased the Japanese Yen (JPY) traders.

During the Asian session, Reuters mentioned that the Bank of Japan's (BoJ) aggressive market operations to defend its policy band for yields has not only sapped liquidity in the government bond market but also drastically limited the scope for speculation in bond futures. Following that, the Japanese Ministry of Finance (MoF) confirmed stealth market intervention on October 21 and 24 last year.

On a different page, sluggish yields also challenge AUD/JPY buyers as the US 10-year Treasury bond yields probe a two-day uptrend by retreating to 3.619% at the latest.

It’s worth noting that the market sentiment remains indecisive as the previous day’s fears of US-China tussles over the balloon shooting seemed to have faded while the Aussie-China ties appear to improve of late. On the same line were the receding concerns of the global recession.

Amid these plays, S&P 500 Futures print mild gains while stocks in Australia print mild losses at the latest.

The preliminary readings of Japan’s Coincident Index and Leading Economic Index for January may entertain AUD/JPY traders. Still, significant attention will be given to the BoJ chatters and risk catalysts like recession woes and the US-China tussles.

Technical analysis

A three-week-old bull flag formation keeps AUD/JPY buyers hopeful unless the quote drops back below the 90.00 psychological magnet.