AUD/JPY: AUS CPI, BoJ 'Double Whammy' for Sellers
Traders short AUD/JPY
continue to celebrate this week's volatile moves in the market, with
today's BOJ-induced sell-off in the pair adding to the losses seen 24h
ago when the Australian CPI Q1 came shockingly low.
Sellers could not dream of a better week
AUD/JPY
exchanges hands around 82.85 lows at present, having seen a minor
bounce at 82.50 weekly lows, prior to a violent sell-off in response to
the BOJ policy announcement. If one measures the extension of the
decline from this week's highs just below 86.50 to today's lows, it is
almost 400 pips, erasing the hard-earned pips from buyers ever since
building positions off April 8th lows below the 82.00 handle.
Kuroda misses an opportunity to keep weakening the Yen
The
aggressive selling is entirely attributed to the major disappointment
that meant an unchanged policy outcome by the BoJ, after speculation had
been building up that Governor Kuroda would probably act yet again in a
bold manner in order to both alleviate the negative rates introduced
late Jan (talk was of negative rates on BOJ loans) and assist the relief
rally in USD/JPY. None of this has come to fruition and the market has
understandably sold the Nikkei 225 and bought Yens as a result.
AUD/JPY key levels
Immediate
support is now found at 82.50 ahead of 82.00 round number, with a break
below the latter most likely exposing 81.70, which represents today's
S3 line. On the upside, given the significance of both fundamental
outcomes (odds of an RBA rate cut in May near 50% and market
disappointment with BOJ outcome), any correction should be fairly
limited before sellers decide to potentially engage in additional
momentum-led selling campaigns intraday, despite the overstretched
nature of the bear moves this week. Watch 83.00 and 83.50 as key levels
where selling may resume.
