28 Jun 2013
Flash: AUD/JPY showed signs of bottoming out? – Westpac
FXstreet.com (New York) - The 15% slide in AUD/JPY from April highs to June lows seems more than ample, notes Global FX Strategist Sean Callow at Westpac.
“While Australia’s domestic data outlook and RBA bias don’t argue for a steep rally, our base case is for a recovery to the 94 region multi-day/week as specs trim AUD shorts. In order to push much beyond 94 however, we would need to see a return of substantial Japanese demand for Australian bonds rather than the recent trend of Japanese investors selling into yen crosses.” Callow adds.
The sharp slide in AUD/JPY in May and late June wiped out a lot of potentially relevant technical resistance levels. The 50% retracement of the October 2012 – April 2013 rally comes in around 92.50/55. But there should be no major technical impediment to our 94 target multiweek.
“While Australia’s domestic data outlook and RBA bias don’t argue for a steep rally, our base case is for a recovery to the 94 region multi-day/week as specs trim AUD shorts. In order to push much beyond 94 however, we would need to see a return of substantial Japanese demand for Australian bonds rather than the recent trend of Japanese investors selling into yen crosses.” Callow adds.
The sharp slide in AUD/JPY in May and late June wiped out a lot of potentially relevant technical resistance levels. The 50% retracement of the October 2012 – April 2013 rally comes in around 92.50/55. But there should be no major technical impediment to our 94 target multiweek.