AUD/JPY: consolidates the early-Asian Italian referendum volatility

AUD/JPY is currently consolidating a volatile start to the day, with a low of 83.76 and a high of 84.74.

AUD/JPY was a risk-off play at the start of the session with the Italian referendum taking the spotlight. The risk to the market is yet again political and the subsequent result to the referendum leaves a dark cloud of the EZ as Renzi has conceded his loss and will now hand in his letter of resignation to the president for consideration tomorrow afternoon (GMT).

Italian referendum: PM Renzi concedes defeat, intends to resign

Renzi's resignation will seriously benefit yet more anti-establishment movements again as was seen with Trump and Brexit and now being the Italian's Five Star Movement that supports a referendum on Italy's euro membership. However, the fact was bought and the yen retreated heavily with risk-on trades coming back in to play.

Meanwhile, on the domestic front, a useful indicator for inflation in Australia, the Melbourne Institute Inflation gauge, arrived Up 0.1% m/m vrs prior +0.2% and was up 1.5% y/y vrs previous +1.5%, well below the RBA's target band between 2-3%.

AUD/JPY levels

AUD/JPY has dropped below the ascending support line on the 4hr sticks, but remains well within the November's rising channel and ascent from the pre-Trump-election risk-ff lows of 76.77. A break to the downside below recent lows and double bottom at 83.75 would target 82.00 as a key level and in line with the monthly 200 sma while 86.69 marks the 2016 highs as a bullish target.