AUD/JPY snaps two-day downtrend below 83.00 as risk appetite improves

• AUD/JPY renews intraday high amid fresh optimism over Ukraine-Russia.
• Chatters over Biden-Putin summit favored market sentiment of late.
• The latest Fedspeak refrains from stronger monetary policy adjustments, weighed on the US Treasury yields, DXY.
• PBOC leaves benchmark rate unchanged, Aussie/Japan PMIs came in mixed.

AUD/JPY grinds higher around intraday top close to 82.75 amid the market’s fresh risk-on mood during Monday’s Asian session. In doing so, the cross-currency pair rises 0.11% intraday while printing the first daily gains in three.

Behind the moves are the latest headlines from AFP that quoted French President Emanuel Macron who proposed a summit of US President Joe Biden and his Russian counterpart Vladimir Putin. The news also mentioned that both the parties have accepted the “principle” of a summit. Following the news, the White House said, “President Biden accepted in principle a meeting with President Putin following that engagement, again, if an invasion hasn’t happened.”

It’s worth noting that, a Reuters earlier mentioned an explosion was heard in the center of the rebel-held city of Donetsk in eastern Ukraine, which in turn kept market sentiment sour at the week’s start. That said, the US continues to suggest an imminent Russian military attack on Ukraine even as Moscow rejects the claims. Also, a diplomatic meeting between US Secretary of State Antony Blinken and Russian Foreign Minister Sergei Lavrov is the ray of hope to witness de-escalation of the geopolitical fears.

Elsewhere, Federal Reserve Bank of Chicago President and FOMC member Charles Evans said on Friday that the current Fed policy had been "wrong-footed" in the face of high inflation, but may not need to become restrictive. On the other hand, New York Federal Reserve Bank President John Williams and the No. 2 official on the Fed’s policy-setting panel mentioned, "I don’t see any compelling argument to taking a big step at the beginning."

It should be noted that the People’s Bank of China (PBOC) kept its benchmark rate unchanged at 3.7% in the latest monetary policy meeting and offered no surprises to AUD/JPY. Also important was the upbeat Aussie PMIs for February from the Commonwealth Bank of Australia (CBA) versus Japan’s softer Jibun Bank Manufacturing PMI for the said month.

Amid these plays, US Treasury yields remain pressured and the stock futures print mild gains of late.

Moving on, risk catalysts are the key for short-term AUD/JPY moves.

Technical analysis

Unless declining back below a convergence of the 21-DMA and an ascending trend line from January 28, around 82.00, AUD/JPY bulls remain hopeful.