AUD/JPY rallies toward a five-month high near 85.60 amid risk-on mood

• AUD/JPY extends the previous session’s upside on Wednesday.
• RBA minutes, easing coronavirus restrictions and higher commodity prices keep aussie in demand.
• The Japanese yen remains on the backfoot against majors on dovish BOJ.

AUD/JPY continues to gain on Wednesday in the early Asian session. The cross-currency pair is rising since the beginning of the October series. As of writing, the AUD/JPY is trading at 85.59, up 0.15% for the day.

Investors digested the Reserve Bank of Australia’s (RBA) latest monetary policy meeting minutes. RBA retreated its stance of no interest rate hikes before 2024 but the central bank affirmed that the economy is expected to return to the recovery path in December, and could reach pre-pandemic growth levels in mid-22.

In addition to that, the higher commodity prices also supported the upside rally in the Australian dollar. Furthermore, New South Wales, Australia’s most populated state removed mask mandates and has allowed larger groups indoors and outdoors, as the full vaccination rate reached 80%. The market ignores the Westpac Leading Index, which dropped 0.02 in September on yearly basis.

On the other hand, the Japanese yen lost its momentum amid an improved risk appetite among investors. It is worth noting that S&P 500 Futures is trading at 4,514, up 0.08% for the day. A Bank of Japan (BOJ) survey showed that Japanese households’ expectations for the year-ahead rose in the three months to September, and the economic outlook also worsened.

Meantime, Japan recorded a trade deficit of 622.80 Ұ billion in September.

As for now, the market dynamics continue to influence the pair's performance in the short term.

AUD/JPY additional levels