- AUD/JPY has jumped sharply near 85.80 on rising commodity prices in the global markets.
- Japan is a leading importer of commodities and higher commodity prices may hurt its fiscal deficit.
- The positive risk barometer cross indicates a risk-on impulse in the market.
The AUD/JPY pair has witnessed a bullish open drive on Monday and has settled above 85.50 amid the risk-on impulse in the market. The prints from the officials of Russia and Ukraine are highlighting the progress in the peace talks and are claiming positive outcomes within a few days, as per Reuters.
The risk barometer has progressed heavily after breaching 85.50 and is trading around 85.80, at the time of writing. The extensions of gains in the risk barometer cross banks upon the rising metal prices in the global markets. The Australian market is a major exporter of iron ore, coal, and other metals and rising metal prices have strengthened the aussie against the Japanese yen.
Meanwhile, a broader sell-off has been witnessed in Japanese yen as the Asian major is one of the leading crude oil importers in the world. Boiling oil prices on abandoning Russian oil imports has posed a threat of widening cash outflows from the Japanese economy against the import of crude oil.
It is worth noting that the broad-based underperformance of the Japanese yen is also dictated by the poor performance of Japan’s macro. Last week, Japan’s quarterly GDP by the Cabinet Office came in at 1.1%, lower than the street estimates and previous print of 1.4% and 1.3% respectively.
Geopolitical tensions between Russia and Ukraine have already rallied the commodity prices and Japan being a major importer of commodities is facing the heat. Therefore, headlines from Ukraine will keep the investors busy. Adding to that, China’s yearly Retail Sales on Tuesday will hog the limelight. The preliminary print of Retail Sales for February at 3%, higher than the prior figure of 1.7% may keep the aussie strengthened.
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