AUDJPY was 1% higher on the day after the Reserve Bank of Australia slashed interest rates and announced a program to buy government bonds. The Aussie interest rate was cut as expected by 0.15% to 0.1% as expected and the bond-buying was also suggested by analyst beforehand.
The Aussie is getting a boost in international markets as the country moves out of the virus after five months. The troubled state of Victoria has moved out of lockdown and has been case-free for four days. This has given traders the belief that the Australian bank’s move will be a timely one to spark a recovery in the country. Japan saw more than 600 cases on Monday and this is adding to the weakness in the Yen.
The RBA’s bond-buying program will see the bank buying bonds with a 5-10yr duration over the next six months at a total spend of A$100bn. The new interest rate is a record low for the Aussie economy and puts it closer to the -0.1% of Japan.
RBA Governor Philip Lowe said:
“The board decided on a package of further measures to support job creation and the recovery of the Australian economy from the pandemic. The economic recovery is underway and positive GDP growth is now expected in the September quarter, despite the restrictions in Victoria”.
AUDJPY Technical Outlook
AUDJPY rallied above the support level at 74.00 and the pair should see a rally towards the 50-day moving average near 75.75 and the resistance above is at 76.50. Bullish traders could go long a bullish close today with a stop below the day’s low. The Investing Cube team is currently available to help all levels of traders with the Forex Trading Course or one-to-one coaching.