Reuters quotes two people familiar with the matter, as saying that Japan has approved shipments of a high-tech material to South Korea for the second time since imposing export curbs last month.

A senior government official noted: “Tokyo’s latest export approval is positive for the local industry, but I don’t see Japan’s move as a conciliatory message to South Korea.”

South Korean Foreign Minister Kang Kyung-wha said, “I believe that (we are) in a very difficult situation.”

This development comes a day ahead of the bilateral meeting between the South Korean and Japanese trade teams in Beijing.

The market sentiment is pretty mixed so far this Tuesday’s Asian trading, as traders turn cautious ahead of the Fed’s Jackson Hole Symposium and the G7 meeting due later this week. The USD/JPY pair trades in a tight range just above the 106.50 level, almost unchanged on the day.

  • AUD/JPY has seen little action following the RBA minutes.
  • The minutes confirmed the RBA's easing bias and that the central bank is in a wait-and-watch mode.
  • The minutes offered no hawkish or dovish surprise, leaving AUD/JPY at the mercy of broader market sentiment.

AUD/JPY is barely moving in response to the minutes from the Reserve Bank of Australia's (RBA) August meeting released at 01:30 GMT.

The currency pair is currently trading at 72.13, up five pips from 72.08 seen before the release of the RBA minutes.

Rates to remain low for an extended period

RBA board would consider a further policy easing, if needed, and would assess developments in domestic, global economies before considering easing, the minutes showed.

The policymakers also expect interest rates to remain low for an extended period and believe the recent slide in the AUD will help exports and tourism.

key points

  • Risks to economy tilted to the downside in the near term, more balanced further out.
  • The board reviewed the experience of developed nations with unconventional monetary policy.
  • Few signs of inflationary pressures emerging, downside risks to some CPI components.
  • The escalation in China-US trade dispute a downside risk to global growth.
  • Further monetary easing "widely expected" around the world.

All-in-all, the minutes confirmed the RBA's easing bias and the fact that it is now on a wait-and-watch mode. The central bank left rates unchanged at 1.00% on Aug. 6.

With the minutes offering no hawkish or dovish surprises, the AUD pairs are at the mercy of the broader market sentiment. It is worth noting that the US stocks put on a good show on Monday with the S&P 500 index rising 1.21%.

Hence, the anti-risk JPY may come under pressure during the day ahead, helping AUD/JPY eke out gains.

Pivot points

  • AUD/USD shows less reaction to the RBA minutes.
  • Risk tone remains choppy amid a lack of fresh catalysts.
  • The US-China trade tussle confronts recently upbeat comments from the Fed policymaker.

The AUD/USD pair remains modestly changed at 0.6765 after the Reserve Bank of Australia (RBA) released minutes of its August 07 meeting on early Tuesday.

Although the Aussie central bank left its monetary policy unchanged at the August meeting, policymakers have been flashing mixed signals since then, which in turn highlighted the importance of minute details.

The RBA minute statement praises the Australia Dollar (AUD) weakness as being supportive of export, tourism while reiterating its view to consider further policy easing if needed. The statement also mentions that it is reasonable to expect an extended period of low interest rates.

Risk tone follows the general tendency of no major moves during the Asian session amid a lack of fresh catalysts. The US treasury yields previously rallied with the 10-year note offering 1.59% by the press time.

Traders show little reaction to the geopolitical tension concerning the Middle East while the US President Donald Trump seems tired of favoring China as his recent tweets concentrated on the UK and Kashmir issue.

The US President earlier opined 100 basis point Fed rate cut but market players gave more attention to the President of the Federal Reserve Bank of Boston who spread fewer worries.

While no major data is up for publishing, comments by the Federal Reserve officials and the Federal Open Market Committee (FOMC) Minutes will be closely observed to get the hints of the US central bank leaders’ major appearance at the Jackson Hole Symposium.

Technical Analysis

Unless breaking the 90-pip area between 0.6735 and 0.6825, the pair is less likely to register much momentum. However, overall weakness remains intact unless crossing 200-day simple moving average (DMA) level of 0.7060.

The Reserve Bank of Australia (RBA) published the minutes of its August 6th, 2019 monetary policy meeting on Tuesday, with the key headlines found below.

AUD fall to support exports, tourism.

Board would consider further policy easing if needed.

To assess developments in domestic, global economies before considering easing.

Reasonable to expect "extended period" of low interest rates.

Risks to economy tilted to downside in near term, more balanced further out.

Board reviewed experience of developed nations with unconventional monetary policy

Noted a package of measures tended to be more effective than single steps.

AUD at lowest level in some years, recent fall to support exports, tourism.

Few signs of inflationary pressures emerging, downside risks to some CPI components.

More spare capacity in labour market than previously thought, to limit wage growth.

Saw firmer GDP growth in Q2, outlook for consumption more balanced than for some time.

Consumption supported by tax rebates, stabilisation in housing market.

Escalation in china – us trade dispute a downside risk to global growth.

Global companies had already significantly revised down investment intentions.

Further monetary easing "widely expected" around the world.

The AUD/USD pair kept its recovery intact from 0.6755 lows, as the RBA minutes had little impact on the Aussie dollar.

About RBA minutes

The minutes of the Reserve Bank of Australia meetings are published two weeks after the interest rate decision. The minutes give a full account of the policy discussion, including differences of view. They also record the votes of the individual members of the Committee. Generally speaking, if the RBA is hawkish about the inflationary outlook for the economy, then the markets see a higher possibility of a rate increase, and that is positive for the AUD.

The US President Trump took out to twitter last hour, speaking about his conversation with the UK PM Johnson ahead of this weekend’s G7 meeting.

Trump tweeted: “Great discussion with Prime Minister @BorisJohnson today. We talked about Brexit and how we can move rapidly on a US-UK free trade deal. I look forward to meeting with Boris this weekend, at the @G7, in France!”

AUD/NZD chipping away at the upside the central bank divergence between the Reserve Bank of Australia and New Zealand. From a technical perspective, the cross can continue higher while supported by rising moving averages within a bullish flag on the daily charts. Today, the RBA minutes could be the next catalyst in its northerly trajectory – We have heard a lot from the RBA since the meeting, in speeches and the quarterly statement so there may not be too much in this. However, a break of the 1.06 handle is required to for the pair to find traction above the 61.8% Fibo retracement. To the downside, the 38.2% is located around 1.0440 as a potential landing spot.

  • USD/CAD keeps it strong above 200-DMA.
  • The Loonie pair still remains below the monthly top.
  • The US Dollar (USD) registers across the board gains while WTI witnesses pullbacks.

The USD/CAD pair’s sustained trading beyond 200-day simple moving average (DMA) enables it to remain firm around 1.3330 during Tuesday’s Asian session.

Despite geopolitical tension in Syria, and also concerning Iran, oil prices fail to rise as the USD’s overall strength disappoints commodity buyers. As a result, the Loonie pair also have to register gains.

It should also be noted that uncertainty surrounding the US-China trade talks is offering additional weight on the commodity-linked currencies, like the Canadian Dollar (CAD).

The greenback buyers have an additional reason to cheer. That is comments from the Federal Reserve Bank of Boston’s President reducing the scope of further Fed rate cuts.

Given the absence of major data/event, investors will keep an eye over news/headlines for fresh impulse.

Technical Analysis

Repeated failures to cross the monthly high around 1.3345/50 makes it the key towards June month top surrounding 1.3435. On the downside, 1.3250 and 50-DMA level of 1.3180 will be important for sellers to watch.

  • EUR/USD remains firm above the short-term rising support line.
  • 23.6% Fibonacci retracement and 4H 100MA seem near-term key resistances.

Having bounced off 13-day old support-line, EUR/USD takes the bids to 1.1085 during early Tuesday.

Not only its pullback from rising trend-line since August 01 but oversold conditions of 14-bar relative strength index (RSI) also increases the odds for its increase.

In doing so, 23.6% Fibonacci retracement of June-August declines near 1.1120 and 100-bar moving average on the four-hour chart (4H 100MA) at 1.1150, becomes the key to watch.

Should there be increased upside beyond 1.1150, a downward sloping trend-line since late-June, at 1.1200, grabs buyers’ attention.

Alternatively, pair’s break of 1.1070 support-line can quickly fetch it to 1.1055 and then to a recent low near 1.1027. Though, 1.10000 becomes the tough nut to crack for bears during further downside.

EUR/USD 4-hour chart

Trend: Pullback expected

  • USD/JPY holds on the 106 handle as a return of risk props up the pair.
  • Technical indicators in the mentioned time-frame remain within positive levels.

USD/JPY holds in the newly acquired 106 territories, boosted again overnight in a risk-on environment where US stocks moved sharply higher. Trump announced that restrictions on Huawei operations would be delayed 90 days, giving US telecom companies more time to untangle their systems from reliance on the company’s technology. This, however, followed weekend comments from Trump over twitter warning that it would be difficult to reach a trade deal if China “did something violent” in Hong Kong.

The Dow Jones Industrial Average DJIA, +0.96% rose around 250 points, or 1%, to end near 26,136, according to preliminary figures, while the S&P 500 SPX added 35 points, or 1.2%, to close near 2,924. The Nasdaq Composite put on around 107 points to end the day near 8,003, a gain of 1.4%. The US dollar was broadly stronger, supported by higher yields. The Washington Post reported that the White House was considering cutting the payroll tax to stimulate growth. USD/JPY rose from 106.30 to 106.70.

Fed president Rosengren advocating for the Fed to pause

Boston Fed president Rosengren who dissented against the rate cut in July, advocating for the Fed to pause at this stage, bullish on the US economy and showing little concern for overseas doom and gloom. In turn, US 2-year Treasury yields climbed from 1.50% to 1.55% while the 10-year yield rose from 1.58% to 1.61%. Still, markets expect a rate cut as soon as September – " Markets are pricing 29bp of easing at the 19 September Fed meeting, and a terminal rate of 0.97% (Fed funds rate currently 2.13%)," analysts at Westpac explained.

USD/JPY levels

Valeria Bednarik, the Chief analyst at FXStreet explained that the USD/JPY pair hast spent the last American session consolidating gains in the 106.50/60 region, maintaining a neutral stance in the short term:

"In the 4 hours chart, the 20 SMA has turned flat below the current level, while the 100 SMA maintains its bearish slope, approaching the mentioned Fibonacci resistance. Technical indicators in the mentioned time-frame remain within positive levels, lacking directional strength and off their daily highs."