AUD/JPY renews four-month high above 85.50 as Russia-Ukraine woes battle RBA’s Lowe

• AUD/JPY takes the bids to poke November 2021 highs after two-day uptrend.
• Market sentiment dwindles on mixed headlines over Ukraine, RBA’s Lowe sounds hopeful of a rate-hike by 2022’s end.
• Japan’s Household Spending data came in firmer for January.
• Qualitative catalysts are more important for clear directions.

AUD/JPY stays on the front foot for the third consecutive day, refreshing a four-month high to 85.60 during Friday’s Asian session.

In doing so, the risk-barometer pair cheers firmer prints of S&P 500 Futures and downbeat US Treasury yields, as well as the hawkish tone of the Reserve Bank of Australia’s (RBA) Governor Philip Lowe. It’s worth noting that the quote ignores recently mixed headlines concerning the Ukraine-Russia tussles while portraying a bullish play.

S&P 500 Futures ignore Wall Street’s losses while printing 0.15% intraday gains whereas the US 10-year Treasury yields pare the previous day’s upside, down 1.7 basis points (bps) to 1.99% by the press time. With this, the risk indicators are a bit distracted.

On the negative side, a total disappointment from the Russia-Ukraine negotiations recently joined news that Russian forces attacked Kharkiv institute that contains an experimental nuclear reactor to weigh on the sentiment. On the same line was the news that Russia called for the United Nations (UN) Security Council to discuss the possible use of chemical or biological weapons in Ukraine.

Alternatively, diplomats from Kyiv and Moscow remain on the table of negotiations, despite marking “no progress” in the latest talks. Further, global oil producers’ readiness to ease pressure on the energy markets caused due to the latest geopolitical crisis also placates the market woes.

Elsewhere, RBA’s Lowe noted core inflation in Australia was still modest at 2.6% and wages were growing only gradually, which allowed time before a hike, per Reuters. On the other hand, Japan’s Overall Household Spending for January rose past the 3.6% forecast to 6.9%.

Moving on, market players will keep their eyes on the risk catalysts for fresh impulse amid a light calendar in Asia.

Technical analysis

Although the 10-DMA restricts short-term AUD/JPY downside around 84.45, an upward sloping trend line from November 19, 2021, close to 85.65 by the press time, challenges the pair buyers before directing them to the year 2021 peak of 86.25.