AUD JPY

I thought we might make it a bit closer to 2025 before the selloff an anticipated selloff on AUD/JPY unfolded. But we're reminded that Trump can make or break sentiment on a whim with his eye now on BRICS countries, which saw AUD/USD fall alongside the FX barometer of risk on Monday.

As AUD/JPY is a classic barometer of risk, we should take note that all is not looking well around current levels. And if AUD/JPY tanks, it’s likely to be followed by risk in general.

If you haven’t heard already, Donald Trump has been elected as President of the United States. flipped the senate and on the cusp of taking the house. A risk-on session ensued, which played nicely for AUD/JPY bulls - who now have 103 in focus.

Stronger EU data and pushback on cuts from ECB sent EUR/USD up to its 200-day MA ahead of risk events. I also assess the trend structures of yen pairs to sort the good from the bad.

Underlying inflation remains uncomfortably high in Australia. With continued strength in hiring keeping labour market conditions tight, it means the prospect for RBA rate cuts in 2024 is now remote. For AUD/USD and AUD/JPY traders, external factors are likely to dictate direction from now until year-end, especially the Federal Reserve rates outlook and US election.

The USD and yields continued to surge following the release of the Fed's beige book. That, alongside a fast-approaching and tight US election race, is prompting Wall Street traders to reassess their exposure. Yet the fallout on ASX 200 futures was limited, and while AUD/JPY might retrace lower we still have an initial target around 102.

Momentum is finally turning higher for AUD/JPY, having found support at the 200-day EMA and 100 handle. We think a move to 102 could is not on the cards. Alongside another dip lower for Nikkei futures.

With Wall Street indices holding up and Australia's strong employment report holding up the Aussie in a weak-yen environment, AUD/JPY looks set for a breaking. Crude oil looks ready for a cheeky bounce too.

AUD/JPY looks to Wall Street for its next directional move while NZD/USD is down for a fifth day ahead of tomorrow's RBNZ meeting. But if they fail to deliver a dovish 50b cut, it could prompt profit taking from bears and weigh further on AUD/NZD.

The key reversal days seen on USD/JPY and AUD/JPY on Friday are hard to ignore, even if we saw mildly bullish attempts to regain some ground on Monday.

With market concerns surrounding a hard economic landing in the US diminishing, it has allowed Japanese yen carry trades to be reestablished, seeing capital flow towards parts of the world that are currently outperforming. The UK is one place that fits that bill, seeing GBP/JPY take out an important resistance level on the charts. Its breakout may act as a lead indicator for AUD/JPY.