AUD/JPY: Multi-week risks are to 73-74 levels - Westpac
According to Sean Callow, analyst at Westpac, AUD/JPY cross reached what are likely to be this year’s highs just above 80 in late April, then commenced a slide to the 75 handle in mid-May.
Key Quotes
“Undermined by the scramble to price in RBA easing after Australia’s low Q1 CPI data and then amplified by the re-ignition of the US-China trade war in early May.”
“This 5 yen slide inside a month is not very mysterious. However, the relatively tight trading ranges since mid-May are a little surprising given how far Australian yields have fallen and the deepening public tensions between the US and China.”
“One supportive factor is positioning, with real money accounts record short A$ in futures markets. Commodity prices are mixed for the Aussie, with metals prices weak but iron ore back above $100/tonne.”
“Reinforcing JPY demand from its safe haven role, the Bank of Japan has largely sat on its hands in recent months even as the 2% inflation target remains well out of reach and the sales tax rise looms in October. The pace of JGB purchases has fallen further below the supposed JPY80trn annual pace.”
“AUD/JPY may enjoy occasional positioning-driven bounces, but without major progress on US-China trade, multiweek risks are to 73-74.”
Author
Sandeep Kanihama
FXStreet Contributor
Sandeep Kanihama is an FX Editor and Analyst with FXstreet having principally focus area on Asia and European markets with commodity, currency and equities coverage. He is stationed in the Indian capital city of Delhi.
