Ella 
The AUD/JPY crossed strongly during the Asian session on Tuesday, but struggled to continue this trend and attracted some selling around the mid-95.00 level. At the same time, the Australian dollar/yen strengthened slightly to around the 94.50 level following the announcement of the Reserve Bank of Australia’s decision, with little fluctuation.
The Reserve Bank of Australia decided to keep the official cash rate (OCR) unchanged at 4.35% at the end of its August policy meeting, in line with market expectations. However, traders are still waiting for more clues on the Reserve Bank of Australia’s next policy moves amid stubbornly high inflation. Therefore, the market focus will still be on the press conference after the meeting. Reserve Bank of Australia Governor Michele Bullock’s speech will affect the trend of the Australian dollar (AUD) and provide some evidence for the AUD/JPY cross. power.
At the same time, the risk appetite impulse reflected in the release rebound of global stock markets will suppress the safe-haven Japanese yen and provide some support for the risk-sensitive Australian dollar. Still, real wages in Japan rose for the first time in more than two years in June, boding well for expectations the Bank of Japan will tighten monetary policy again. This should therefore help limit further losses in the yen and cap gains in the AUD/JPY cross.
In addition, concerns about a slowdown in China, the world’s second-largest economy, also warrant caution, as caution must be exercised before making aggressive bullish bets on China’s proxy currency, the Australian dollar. Therefore, it would be best to wait for strong follow-through buying before confirming that the AUD/JPY cross has formed a short-term bottom. That said, AUD/JPY now appears to have snapped its five-day losing streak to levels last seen in March 2023, around the 90.15-90.10 level hit on Monday.
