AUD/JPY - Australian dollar to Japanese yen

After strengthening against the yen following the election of Trump and continuing its ascent in early 2017, AUD/JPY ran out of steam. Since then the pair has traded with no obvious long-term trend. The exchange rate has fallen on political risks (particularly North Korea), while gaining when tensions subside. For this reason, the AUD/JPY exchange rate is frequently seen a barometer of global risk appetite. 

Short term outlook
Bearish
Medium term outlook
Neutral

Australian dollar daily update

The Australian dollar is fairly mixed today as the global stock market rebound runs out of steam. As a commodity currency, the Australian dollar is highly sensitive to global risk taking appetite. Today, investor sentiment appears to be waning based on global equity and commodity markets. Looking at Asian financial markets, key stock markets including China's Shanghai Composite and Japan's Nikkei 225 have only rebounded to a very limited extent. Austalia's ASX 200 is currently selling off. Relative to its major peers, AUD is currently flat against the US dollar while gaining against the euro and the British pound. As the currency has been fairly weak in the short-term, our outlook remains neutral. In the medium-term, we remain mildly bullish on the Australian dollar's prospects. 

AUD/USD is down slightly and trading just above 0.7920. EUR/AUD is down and trading above 1.5710. GBP/AUD is down and trading above 1.7690.

Looking at economic data from Australia this week, traders will be watching employment figures. NAB business confidence (12 vs. 11 prior) was ahead of previous numbers. Westpac consumer sentiment (-2.3% vs. 1.8% prior) was below previous figures. Tomorrow is the most important day, and we'll see employment changes, the unemployment rate and consumer inflation expectations. On Friday, RBA Governor Philip Lowe will deliver a speech. Last week, the trade balance was significantly below estimates thanks to higher-than-expected imports. 

Updated 

Japanese yen daily update

The Japanese yen continues to strengthen today, particularly against the US dollar. As a safe haven currency, the yen tends to weaken when global growth is accelerating and strengthens during downturns. While the yen began rising following fears of an extended stock market rout, the currency continues to strengthen despite a rebound in most global stock markets. Looking at Japanese domestic data, weak quarterly GDP growth figures and falling machinery exports helped yen strength this week. Turning to monetary policy, the current Bank of Japan Governor Haruhiko Kuroda was appointed for a rare second term, despite his age (73). Kuroda was appointed alongside deputies including BoJ executive director Masayoshi Amamiya and Waseda University professor Masazumi Wakatabe. Both are well-known for their pro-monetary easing views. Unfortunately for the yen, this isn't enough to change the course of the currency as it continues to strengthen. Our short-term and medium-term outlook on the yen remains bullish.    

USD/JPY is currently trading above 105.80. EUR/JPY is currently flat and trading above 132.70.

Looking at Japanese economic data, traders will be focused on upcoming GDP figures. Annualized QoQ GDP growth numbers (0.5% vs. 0.9% expected) widely missed estimates. Machinery orders (-5% vs. 2.2% expected) missed expectations by a very wide margin due to falling exports. Industrial output (2.9% vs. 0.5% prior) was higher than previous figures. Cross-border stock (-¥429.5b) and bond (-¥973.2b) investments continue to suggest capital inflows into the country. Last week, cross-border figures also showed that capital was flowing into Japan (strengthening the yen). 

Updated 

Australian dollar to Japanese yen Outlook

Short term outlook
Bearish

As the pair keeps weakening, we are now bearish on AUD/JPY. The pair is now trading within a normal range in the short-term. This is based on various technical indicators looking at a daily chart. 

Medium term outlook
Neutral

As the pair runs out of steam, we are now neutral on AUD/JPY. Looking at various technical indicators, the pair is now trading within normal conditions. This is based on various technical indicators looking at a weekly chart. 

Updated 

Australian dollar analysis

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Japanese yen analysis

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Japanese yen: Bank of Japan versus interest rates

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Tags: Japanese yen

BoJ preview: reversal rates and natural yield curves

As the Bank of Japan is one of the world’s most dovish central banks, market expectations for this week’s upcoming event are very limited. Governor Haruhiko Kuroda, who has overseen a $4T quantitative easing program and negative interest rates over his 5-year term at the Bank, is an unlikely candidate to bring about hawkish monetary policies. This is especially the case as domestic inflation rema…

Published 
Tags: Japanese yen

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