AUD/JPY remains well bid around mid-94.00s after RBA keeps interest rate steady at 4.35%

• AUD/JPY attracts some buyers and builds on the overnight recovery from the YTD low.
• The risk-on impulse undermines the safe-haven JPY and lends some support to the cross.
• The RBA’s decision to leave interest rates unchanged does little to provide any impetus.

The AUD/JPY cross gains strong positive traction during the Asian session on Tuesday, albeit struggles to capitalize on the move and attracts some intraday sellers near the mid-95.00s. Spot prices, meanwhile, stick to modest intraday gains around the 94.50 level and move little after the Reserve Bank of Australia (RBA) announced its decision.

As was widely anticipated, the Australian central bank decided to leave the Official Cash Rate (OCR) unchanged at 4.35% at the end of the August policy meeting. Traders, however, await more cues about the RBA's next policy move amid stubbornly high inflation. Hence, the market focus will remain glued to the post-meeting press conference, where comments by the RBA Governor Michele Bullock will influence the Australian Dollar (AUD) and provide some impetus to the AUD/JPY cross. 

In the meantime, the risk-on impulse – as depicted by a relief rally across the global equity markets – is seen undermining the safe-haven Japanese Yen (JPY) and lending some support to the risk-sensitive Aussie. That said, a rise in Japan's real wages in June for the first time in more than two years bodes well with market expectations that the Bank of Japan (BoJ) will tighten monetary policy again. This, in turn, should help limit deeper JPY losses and cap gains for the AUD/JPY cross. 

Apart from this, worries about a slowdown in China – the world's second-largest economy – warrant caution before placing aggressive bullish bets around the China-proxy AUD. Hence, it will be prudent to wait for strong follow-through buying before confirming that the AUD/JPY cross has formed a near-term bottom. Nevertheless, spot prices, for now, seem to have snapped a five-day losing streak to the lowest level since March 2023, around the 90.15-90.10 region touched on Monday.