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28 May 2013
Flash: AUD/JPY risks remain tilted towards downside – Westpac
FXstreet.com (Barcelona) - According to Global FX Strategist Sean Callow at Westpac, “The AUD/JPY risks remain tilted to the downside in coming weeks – our base case is for an extension of recent losses to 94-95.00 as the BoJ stays on hold and investment outflows from Japan remain patchy while AUD struggles to find positive news.”
“The nearer term target is 96.00, with the JPY likely to gain more than the AUD on a slight cooling in expectations of a near term reduction in Fed stimulus. The AUD/JPY has ground through the 55 and 100 day moving averages in the past two weeks but remains well clear of the 200-day SMA at 91.10.” Callow adds.
The 21-day (1 month) correlation between daily percentage returns of the AUD/USD and the USD/JPY is a substantial but not overwhelming -0.38, allowing the AUD/JPY to establish some direction after range trading from April into May.
“The nearer term target is 96.00, with the JPY likely to gain more than the AUD on a slight cooling in expectations of a near term reduction in Fed stimulus. The AUD/JPY has ground through the 55 and 100 day moving averages in the past two weeks but remains well clear of the 200-day SMA at 91.10.” Callow adds.
The 21-day (1 month) correlation between daily percentage returns of the AUD/USD and the USD/JPY is a substantial but not overwhelming -0.38, allowing the AUD/JPY to establish some direction after range trading from April into May.