Understanding that AUDJPY has broken the recent high that was equaled on the some time in June and September. Looking at the fundamentals the AUD/JPY is an interesting pair for its relation to risk. The pair is among one of the correlated pairs to price action in US equities on a short to medium term basis. The pair generally tends to rise in a low risk environment on carry flows while the opposite is true when we see a 'risk-off' approach in the markets.
The Japanese Yen remains vulnerable to further downside due to recent comments from the Bank of Japan (BOJ) Governor Ueda and Japan’s Minister of Finance Akazawa The Australian dollar capitalized on last week’s close above the 0.6500 psychological handle this Monday morning as markets mull over global monetary policy. Australian jobs data was quite the opposite with unemployment holding steady while employment change beat estimates. Inflation expectations have pushed higher and that could place more pressure on the Reserve Bank of Australia (RBA) to sustain tight monetary policy with the possibility of additional interest rate hikes. Looking at money market pricing below, it is evident that markets have left the door open for more tightening. That being said, incoming data will be crucial for guidance around central bank strategy.
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