AUD/JPY on fire at the Tokyo open, approaches 77.50

Currently, AUD/JPY is trading at 77.46, up 0.34% on the day, having posted a daily high at 77.49 and low at 77.13. The bullish momentum continues strong at the open of markets in Tokyo, with higher Japanese wages partly to blame.

Japan's labour cash earnings higher

The move follows better wages data in Japan, with the labor cash earnings for June comign at +1.3% y/y vs +0.3% expected and -0.1% last, while real cash earnings stood at +1.8% y/y vs 0.4% last. After the data, a Japanese labour ministry official notes that the reason behind the jump in real wages  was that "the core consumer price index was negative 0.5 percent in June" adding that "summer bonuses pushed nominal cash earnings higher."

RBA SoMP eyed

Today’s SoMP by the RBA, as ANZ notes, will discuss the reasons behind the recent 25bp easing rather than provide forward guidance.

ANZ notes: "In our view, the RBA should leave its forecast profile for persistently low underlying inflation intact, while the outlook for growth should be little changed, except for higher near-term growth, given Q1 GDP was significantly higher than the RBA expected."

"The forecast horizon will be extended six months to Q4 2018 and we think the RBA will forecast underlying inflation to return to the 2-3% target band by that time. If we are wrong and the RBA continues to forecast a range of 1.5-2.5%, we would view this as a dovish signal", ANZ adds.

How strong has the move been in early Asia?

The hourly FXStreet OB/OS Index is showing neutral conditions, alongside the FXStreet Trend Index which is slightly bullish. At the time of writing, RSI is neutral at 67.64, up from 63.08 at the last hour close, while ADX is ranging at 28.63, up from 23.71 previous. Meanwhile, daily RSI is in neutral territory at 41.53. On the hourly AUD/JPY chart, the 200 SMA is declining and currently at 76.96, down from the previous hour close at 77.90. On average, the exponential closing price for the past 20 days is 78.18, with the trend indicating a continuation lower ahead.

What price levels have to be considered?

Current price is 77.47, with resistance ahead at 77.49 (Daily High), 77.70 (Daily Classic R3), 77.90 (Hourly 200 SMA), 78.18 (Daily 20 SMA) and 78.28 (Weekly Classic PP). Next support to the downside can be found at 77.40 (Daily Classic R2), 77.37 (Yesterday's High), 77.21 (Daily Open), 77.15 (Hourly 20 EMA) and 77.13 (Daily Low).