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AUD/JPY dips below 88.00 after RBA minutes, risk reversal drop

AUD/JPY dips below 88.00 after RBA minutes, risk reversal drop

AUD/JPY fell to a session low of 87.88 after the RBA minutes showed policy makers are in no rush to hike rates.

The minutes also talked about the disinflationary impact of the strong Aussie, low wage growth and subdued price pressures. The minutes also softened the language on the strong Aussie by adding the word “material” to its warning on the currency, however, the change in the language has gone unnoticed.

One week risk reversals drop, Vols pick up

The one-week 25-delta risk reversals fell to -2.20; the lowest level since September 8. Meanwhile, the one-week ATM volatility currently stands at 8.20; the highest since September 29.

The drop in the one-week risk reversals indicates out-of-the money JPY calls/AUD puts are in demand ahead of the Japanese elections.

AUD/JPY Technical Levels

A break below 87.84 (10-DMA) would open doors for 87.62 (50-DMA) and 87.25 (Oct 10 low). On the higher side, breach of resistance at 88.15 (session high) would open up upside towards 88.31 (Oct 13 high) and 88.48 (Sep 12 high).

15M Strongly Bearish Oversold High
1H Bearish Neutral Shrinking
4H Bearish Neutral Low
1D Bearish Neutral Low
1W Bullish Neutral Low


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