AUD/JPY hits 21-month high of 90.30 as yield spread widens to 6-month high

The sharp sell-off in the Japanese Yen following a hawkish Fed and the relatively resilient Aussie pushed the AUD/JPY cross to a 21-month high of 90.30 levels in Asia.

The spread or the difference, also known as bond yield differential, between the Aussie 10-year government bond yield and the Japanese 10-year government bond yield widened to 285 basis points [bps]; the highest level since mid-March.

Focus on RBA Governor Phillip Lowe speech

The AUD/USD did retreat from the high of 0.8103 post-Fed, but still sits above 0.80 handle. The resilience is a matter of concern for the RBA as it could complicate the economic rebalancing and drag down inflation.

RBA Governor Phillip Lowe, due to speak at 05:10GMT could jawbone the Aussie dollar. The publication of the Reserve Bank of Australia's (RBA) latest bulletin at 01:30GMT, could influence "Aussie" movement too.

AUD/JPY Technical Levels

The spot was last seen trading around 90.23 levels. A break above 90.72 [Nov 2015 high] would open up upside towards 91.00 [zero levels] and 91.21 [0.618 fib ext. of June 2016 low-Feb 2017 high-Apr 2017 low]. On the downside, failure to hold above 90.00 [psychological level] could yield a pullback to 89.42 [July 22 high] and 89.00 [zero levels].