AUD/JPY finished 1% higher US bond inspired USD/JPY strength sees another attempt to break the sturdy 79.03 resistance that has held four times already this month. Risk on trading and high commodity prices drove the start of the weeks attempt. The September high of 79.11 is the initial target, followed by 81.370, as a stepping stone towards July highs of 86.400.
Fed minutes from the September meeting mentioned ‘credibility’ four times showing members have a fear of reputational damage. Poor credibility comes from Januarys forward guidance in which they instructed four hikes, but have only executed one. September’s meeting referenced another rate hike this year. There was a strong consensus inflation is not a current issue. Fed influence caused USD/JPY to open 0.7% higher combined with BoJ guidance to raise their threshold for further easing.
AUD/NZD retraced from 1.07240 to 1.06950 but remained above the 200 Day moving average. The RBNZ dovish stance is weighing on the Kiwi and could help propel AUD/NZD past the 1.07400 resistance from July and August.
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