Asia’s main commodity currencies are under pressure once more, with both AUDUSD and NZDUSD breaking important short-term support zones. This time around the sell-off is the result of tumbling commodity prices, with iron ore, Australia’s number one export, falling 4% at the end of last week to a six year low. Some producers are calling for a production cap to help stabilise prices. The ASX 200 also couldn’t escape the carnage with the index falling around 1.2% in the first hour of trading today.
In other news, there has been more disappointing economic data from Japan. Industrial production fell a disappointing 3.4% in February, missing an expected 1.9% decline. This can be explained by Japanese factories shutting down for the lunar New Year, but a lack of activity at the ground level in Japan is concerning. While a weaker yen is bolstering the export market, domestic demand remains soft. At the end of last week, disappointing retail sales, consumption and inflation data didn’t paint a very pretty picture of the Japanese economy.
The yen softened slightly on the back of today’s figures, but they aren’t expected to materially impact policy. Yet, the combined weight of all this soft economic data may help protect USDJPY in the near-term. We are keeping our eye on support around 118.90/119.00.
Another yen pair to watch is AUDJPY, especially after the recent action in the aussie. The pair is looking fairly weak, yet it remains in a medium-term upward trend. A break of this trend may see the pair make a run for support around 90.00, despite to the possibility of further yen weakness.
Source: FOREX.com
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