Missed Opportunities In AUDJPY
As we wrap up another week, it’s time to take stock of the winners and losers (and I’m not talking about the Euros!). For some, this weekend will be one for celebrating some great trades made, for others it will be a time to reflect on their performance and strategy. However, for some it will be the more excruciating opportunity to ruminate on the winners not taken – is there anything worse than missing a winning trade?
Talking with traders this week it seems the big move everyone is focused on is the sell off in the Aussie. In terms of trades, the move was seen best in AUDJPY which fell almost 300 pips, more than 3.5%. So, as ever, if you caught the trade, congratulations! And if you missed it, better luck next time. Let’s walk through what happened and why this was a great trade.
What Caused The Move?
First thing’s first. AUD has been under heavy selling pressure since the Australian government announced fresh lockdowns around a fortnight ago. With the delta variant on the increase, the government locked down seven regions, imposing stay at home orders on around 12 million Aussie citizens. This has raised fresh fears for the economy, provoking investor uncertainty and weighing on Aussie sentiment.
Indeed, the sell off in the Aussie comes despite a more optimistic message from the RBA at its recent July meeting. While the bank still sees 2024 as the lift off date for rates it has now changed its message to being data dependant, not date dependant, which raises the risk of an earlier-than-forecast lift off if the data supports it. However, with the bank reiterating the need to keep easing in place and refusing to rule out the need for further easing, the meeting was unable to provide AUD with the lift that bulls needed.
China Troubles
Into the middle of this week, AUD has come under pressure form weaker-than-expected data out of China. As the country’s largest trading partner, weak data in China always strikes a blow to Aussie sentiment. This is especially true at the moment given the fraught trade links between the two economies currently.
JPY Safe-Haven Strength
On the other side of the equation then, is the current strength in the Japanese Yen. The safe-haven currency has been back in demand this week amidst a weaker USD and stalled upside in equities. So, let’s take a look now at the technical picture.
Technical Views
AUDJPY
The breakdown in AUDJPY has seen price trading through the 82.02 level support. With MACD and RSI both bearish, the focus is on a deeper push towards the 80.69 and 79.57 level as per the recent Market Spotlight. With the retail community over 60% long, there is room for the correction to develop further here.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.