Retail Heavily Long AUDJPY
The retail market is holding a large 70% long position in AUDJPY today as the pair continues to sell off, creating plenty of room for a further move lower over the coming sessions. AUDJPY is typically seen as a simple risk play given that AUD tends to perform better during times of robust risk appetite, while JPY weakens on reduced safe-haven demand. Similarly, during times of risk aversion, AUD typically weakens while JPY tends to rise on increased safe-haven demand.
Risk Aversion Hurting AUD
This week, risk aversion has swept back across markets in response to weaker than forecast US data and renewed concerns for the US banking sector as FRC shares suffer a fresh crash. With stock prices cooling sharply, AUD has come under pressure as traders divert their attention away from riskier holdings into safety. This dynamic has seen JPY rallying accordingly on increased safe-haven inflows. Added to this, the latest Aussie CPI data overnight saw inflation falling again last quarter, reinforcing the view that the RBA will remain on hold near-term. Near-term, while risk aversion remains in place, AUDJPY looks likely to continue lower fuelled by retail bids.
Technical Views
AUDJPY
The sell off in AUDJPY from the recent highs around the 90.52 mark has seen the pair breaking down below 89.45, framed by a narrow bear channel. With momentum studies bearish and retail heavily long, the focus is on a continued move lower and a break of the 87.54 level, targeting a move down to 86.12 thereafter.
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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.