AUD/JPY on Free--Fall, 'Risk-Off' Rules

AUD/JPY on Free--Fall, 'Risk-Off' Rules

2 June 2016, 06:16
Roberto Jacobs

AUD/JPY on Free--Fall, 'Risk-Off' Rules

AUD/JPY extended its sell-off on Thursday, last paid at 78.70/80 session lows, as the Japanese Yen continues to appreciate further, benefited by the risk averse sentiment in the market place, with the Nikkei 225 falling over 2% by lunch break.

Yen buying dominates this week, better Aus fundamentals not enough

The pair has lost over 200 pips since topping out above 80.50 during yesterday's European session. Despite a better-than-expcted Australian GDP Q1 on Wednesday, coupled with an improved April trade balance deficit in Australia (release today), and even if retail sales for April were slightly below estimates, the aggressive and consistent buying in the Japanese Yen has caused the Aussie to temporarily lose its allure as commodity currencies get dumped on 'risk off' flows.

AUD/JPY key levels

On the downside, sellers will face an important macro level circa 78.50, where multiple rejections have been seen since early May, first time when buyers showed up at the level, to initiate what has been a 200 pips range approximately ever since, between mentioned 78.40/50 area and 80.50/80.80. A break below 78.40/50 would expose the next immediate support at 78.00. Should buyers aim to re-gain the upper hand, a break and build of value above 79.50 is required, although even if that's the case, breaking above 80.00 is not going to be an easy task for bulls.


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