- AUD/JPY rising a softer yen and risk-on tones.
- RBA in focus while AUD remains sensitive to the overall tone in risk appetite.
AUD/JPY has been trading on the bid at the start of this week with a slightly better risk-tone in markets pertaining to what appears to show a slight slowdown in the spread of COVID-19. At the time of writing, AUD/JPY is trading at 66.37 and between a range of 64.98 and 66.60 +2.16% on the day so far.
The COVID-19 spread is the main driver with stimulus measures being an underbelly of support for risk-on, albeit dashed with an element of great uncertainty containing a full-on drive in positive risk asset classes. AUD/JPY, however, is enjoying some relief from the weekend news pertaining to what appears to be a sign of slowing numbers of new cases and death tolls. However, this is a week which US President Donald Trump regards and warned of being “the toughest week” – more on that here: COVID-19 Updates: A crucial week ahead for the debacle.
As for the yen, net long positions dropped back for a second consecutive week following a positive spell in early March for the first time since October reflecting the JPY’s safe-haven status. However, given the spike in COVID-19 cases and the state of the economy, there could be a reluctance to stay invested in such an uncertain trade. Moreover, on a 1-month view the JPY has lost ground vs the USD in the spot market reflecting the latter’s dominant position as a safe haven.
RBA in focus
Meanwhile, all eyes will turn to the Reserve Bank of Australia today while AUD remains sensitive to the overall tone in risk appetite. As analysts at TD Securities (TDS) argued, "following rapid easing and the move into unconventional policy last month, we expect the RBA to keep the cash rate on hold at 0.25%. We don't anticipate the RBA to announce any adjustments to policy, but any indication on volume and frequency of purchases will garner attention."
The analysts at TDS suggest that there were two key pieces of information from the minutes of the RBA's 18th March board meeting released last week:
- 0.25% is the effective lower bound. The RBA stated "Members had no appetite for negative interest rates in Australia".
- The downturn could extend beyond Q2: "....it was likely that Australia would experience a very material contraction in economic activity, which would spread across the March and June quarters and potentially longer."
AUD/JPY levels
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
AUD/USD holds above 0.6500 in thin trading
The Australian Dollar managed to recover ground against its American rival after AUD/USD fell to 0.6484. The upbeat tone of Wall Street underpinned the Aussie despite broad US Dollar strength and tepid Australian data.
EUR/USD comfortable below 1.0800 lower lows at sight
The EUR/USD pair lost ground on Thursday and settled near a fresh March low of 1.0774. Strong US data and hawkish Fed speakers comments lead the way ahead of the release of the US PCE Price Index on Friday.
Gold pulls away from daily highs, holds above $2,200
Gold retreats from daily highs but holds comfortably above $2,200 in the American session on Thursday. The benchmark 10-year US Treasury bond yield stays near 4.2% after upbeat US data and makes it difficult for XAU/USD to gather further bullish momentum.
Google starts indexing Bitcoin addresses
Bitcoin address data is live on Google search results after users realized on Thursday that the tech giant started indexing Bitcoin blockchain data. However, mixed reactions have followed the tech giant's reversed stance on the cryptocurrency.
A Hollywood ending for fourth quarter GDP
The latest revisions put Q4 GDP at 3.4%, the second fastest quarterly growth rate in two years. Much of the upside was attributable to stronger consumer spending, yet fresh profits data affirmed it was a good quarter for the bottom line as well with profits up by the most since the Q2-2022.