- AUD/JPY dropped on slippage in the greenback across the board and made a fresh low for the session so far.
- US elections are taking the attention of markets as results for contested seats are starting to come through.
AUD/JPY has been on the front foot leading into Asia with resilience in the Aussie despite perky US yields and firm DXY while commodities took a knock at the same time. However, USD/JPY is starting to come off and testing below the 113 as the dollar peels off and falls below the 96 handle in the DXY.
The markets are expecting that the House will switch over to the Democrats and that is hurting the dollar.
"Based on the favourable margin in the polls, the historical precedence that the party in the White House loses in the mid-terms, and the narrative that there is “something to vote for”, the conventional wisdom has become that the margin of the Democrats will be enough to flip the House," analysts at Rabobank explained, adding:
"If the Democrats manage to win at least one of the two chambers - there is a fair chance for a House takeover, but the Senate map looks very difficult for the Democrats as Philip and Stefan explain - the US will end up with a divided government. This in turn would have significant implications for President Trump, who would not be able to ignore the Democrats. It would prove even more difficult for the White House to push critical legislation through Congress if the Democrats manage to win the House and the Senate. However, this is an unlikely scenario."
AUD/JPY levels
RSI is turning negative and AUD/JPY has been capped ahead of R2 located up at 82.35 meeting a double top at 82.25 and is testing the rising 21-hr SMA located at 81.92 which guards a run to S1 at 81.72 ahead of 81.26 and then 81.09 as the next supportive pivots. 80.64 is a key 61.8% Fibo and 80..25 is a 50% Fibo level.
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