AUD/JPY suffers a brief dip after wider Australia current account deficit

• Australia posted a wider second quarter current account deficit.
• AUD/JPY printed session lows below 80.00, before steadying around the psychological level.
• Caution ahead of the RBA rate decision could cap upside in the pair.

The AUD/JPY hit a session low of 79.81 after the Australian Bureau of Statistics (ABS) reported a wider-than-expected second-quarter current account deficit (CAD).

At press time, the currency pair is changing hands at 80.00.

The AUD was offered immediately after the news hit the wires that the Q2 CAD widened to AUD 13.5 billion, beating the expected print of AUD 11.5 billion.

Indeed, the number was disappointing at the surface, however, details revealed the net exports could add 0.1 percent to the Q2 GDP data scheduled for release tomorrow. The good news likely helped the AUD/JPY quickly recover back to 80.00.

However, the upside is being capped by the 50-hour MA, currently located at 80.05, possibly due to caution ahead of the Reserve Bank of Australia (RBA) rate decision. A consensus is building in the market that the RBA may not be able to hike rates next year and a few are expecting the bank to adopt a dovish stance today.

So, it the central bank remains, we could see a corrective rally in the AUD/JPY pair.

AUD/JPY Technical Levels

Resistance: 80.05 (50-hour MA), 80.26 (resistance as per the hourly chart), 80.65 (100-hour MA)

Support: 79.81 (session low), 79.64 (Aug. 31 low), 79.52 (Sept. 2 low)