AUD/JPY bulls welcome RBA’s hawkish rate hike to pierce 92.00

• AUD/JPY jumped 30+ pips as RBA announced 0.25% rate hike and expects further lifts in the key rates.
• Cautious optimism in the market also underpins the bullish bias.
• Chatters surrounding the BOJ’ monetary policy tightening challenge upside moves.

AUD/JPY rose over 30 pips on the Reserve Bank of Australia’s (RBA) 0.25% interest rate hike during early Tuesday. In addition to the rate lift, the hawkish comments from the RBA Rate Statement also seemed to have propelled the AUD/JPY prices of late.

RBA matched market forecasts of announcing 25 basis points (bps) of a rate hike but tamed bears expecting a pause in the Aussie central bank’s hawkish moves during early 2023.

Also read: RBA: Board expects to increase interest rates further over the period ahead

The AUD/JPY pair also cheered the market’s firmer sentiment, due to its risk-barometer status. However, recent talks over the Bank of Japan’s (BOJ) exit from the easy money policies seemed to have probed the pair.

That said, Reuters quotes Takeo Hoshi, an academic with close ties to incumbent central bank policymakers, to mention that the Bank of Japan (BoJ) could do away with its 10-year Japanese government bond (JGB) yield cap in 2023 on increasing odds that inflation and wages will exceed expectations. Earlier in the day, BOJ’s Kuroda mentioned that Japan has not achieved stable 2% inflation accompanied by wage rises. However, the policymaker also stated, “Once the 2% inflation target is consistently met, will consider exiting ultra-loose policy.”

The risk-on mood could be linked to the doubts over the Fed’s hawkish play amid the recent retreat in the US inflation expectations, as well as optimism surrounding China’s Covid conditions.

While portraying the mood, S&P 500 Futures print 0.20% intraday gains around 4,011 while snapping a three-day downtrend. That said, the US 10-year Treasury bond yields fade the bounce off an 11-week low marked the last Friday, down three basis points (bps) to 3.56% by the press time.

Looking forward, an absence of major data/events could challenge the AUD/JPY pair buyers as BOJ hawks seem to flex their muscles.

Technical analysis

A clear upside break of the 200-DMA hurdle, close to 93.00 at the latest, becomes necessary for the AUD/JPY bulls to keep the reins.