AUD/JPY slides towards 93.50 after RBA Minutes, Japan’s verbal intervention

• AUD/JPY renews intraday low, reverses from eight-day high.
• RBA Minutes, Deputy Governor Bullock tried to defend hawks but failed.
• Multiple policymakers from Japan signal readiness to act even if no actual measures are taken.
• Japan’s action becomes necessary for the bear’s return, risk-on mood favors buyers.

AUD/JPY consolidates the week-start gains around 93.70, reversing from an eight-day high, as Japanese policymakers try hard to convince markets that they can defend the yen if needed. Also challenging the pair buyers is the latest Monetary Policy Meeting of the Reserve Bank of Australia (RBA), as well as comments from RBA Deputy Governor Guy Bullock.

With the USD/JPY prices rallying to the 30-year high, markets expect Japanese intervention to defend the domestic currency. However, the policymakers from Japan have been trying to cover up their resistance to meddle in the market while showing readiness to do so.

Recently, Japanese Prime Minister Fumio Kishida stated that he won't comment on specific yen levels but govt ready to take appropriate action as needed. On the other hand, Bank of Japan (BOJ) Governor Haruhiko Kuroda mentioned, “BOJ will keep close eye on fx, market moves and their impact on economy.”

Elsewhere, the RBA Meeting Minutes stated that the board weighed a range of arguments for hiking by 50 basis points, as it had for four months straight, but decided to lift the cash rate by 25 basis points to 2.6%.

On the same line, RBA Deputy Governor Guy Bullock mentioned that the board expects to increase interest rates further over the coming months. The policymaker also added that the pace and timing will be determined by data.

Furthermore, China’s zero-covid policy, delaying of the key data/events and determination to defend the might of taking control in Hong Kong and Taiwan also challenge the AUD/JPY buyers, due to the pair’s risk barometer status and ties with Beijing.

It should be noted that the risk-on mood, inspired by the UK’s latest U-turn on “mini-budget”, seemed to have restricted the AUD/JPY downside of late.

Moving on, Japan’s intervention is closely eyed and can drown the quote on announcements. Until then, a light calendar and cautious mood may restrict the AUD/JPY pair’s moves.

Technical analysis

Until dropping back below the resistance-turned-support from mid-September, near 92.60 at the latest, AUD/JPY bulls remain hopeful of challenging the 100-DMA hurdle surrounding 94.25.