AUD/JPY making tracks towards closing the bearish opening N.Korea risk-off gap?

AUD/JPY is currently trading at 87.43 having made a high of 87.57 and a low of 87.15.

Risk-off sentiment shot up at the start of the week after N.Korea antagonized both China and Japan and rustled the feathers f the US once again with its persistent testing of weapons. 

North Korea conducted its sixth nuclear test and fired missiles over Japan again. AUD/JPY dumped 40 pips on the open in a bearish gap. 

"We believe room for diplomatic engagement is now rather limited and acknowledge that the risks of a US military intervention or miscalculations by Pyongyang are rising," analysts at Nomura are fearing. 

North Korea conducted its sixth nuclear test - Nomura

Meanwhile, attention is also turning towards the RBA with the next board meeting on September 5 where markets are pretty certain that they will keep rates on hold. 

Analysts at Westpac explained that it is interesting to recall the key aspects of the Governor’s Statement following the last meeting on August 2:

• "1. The RBA expects growth to be “around 3%" - in fact, updated forecasts released three days later showed the Bank had retained its May forecasts of 3.25% in 2018 and 3.5% in 2019 (comfortably above trend of 2.75%). 
• 2. A pick-up in non-mining investment and wages growth is expected for 2018 and 2019. 
• 3. The Bank expects the unemployment rate to decline a little over the next couple of years. 
• 4. The higher exchange rate and any further appreciation are expected to contribute to reduced price pressures and a slower pick-up in activity. Note that despite those comments, there was no change in the Bank’s growth forecasts between May (AUD at USD 0.74) and August (AUD at USD 0.79). The AUD has remained in the USD 0.79-0.80 range since the last meeting. 
• 5. Growth in housing debt has been outpacing the slow growth in household incomes (an indirect reference to concerns around house prices)."

AUD/JPY levels

AUD/JPY is trading between 89.40 and 85.50 in the wide range while near term support comes in at today's low, 86.80/90 and the same vicinity as the 50 sma on the 4hr sticks ahead of 86.40, the 29th Aug low. To the upside, 87.90 is the near term high for Sep so far.