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28 Feb 2014
AUD/JPY lacking conviction and channel resumes
FXStreet (Guatemala) - AUD/JPY has spiked up from 91.30 territory into a high of 91.63 as stops were triggered in the AUD/USD. The spike attracted supply which brings us back below the middle ground of the move, currently oscillating around 91.45 and above the pivot.
We are back into the sideways channel formation for the week ahead of the close where support is confirmed at 91.30 on a double bounce. From the calendar, a number of data releases for Japan were released before the Tokyo fix with Japan's Industrial Production at 4.0% m/m vs 2.8% expected and Japan's Retails Sales for Jan at 1.4% vs 1.3% m/m and Year-on-year 4.4% vs 3.8% expected. Japan unemployment unchanged at 3.7% with the number of jobless declining in January for the 44th consecutive month. For AUD, we have seen Australian Private Sector Credit showing 0.4% m/m vs 0.5% expected. We are also reminded by the FX Strategists at the Bank of Tokyo Mitsubishi UFJ. that the partial indictors for Q4 GDP in Australia (which is out next Wed) have not been positive. The strategists said they are sticking with a 0.9% forecast but upside risks have now been removed. The sideways channel may have some more to play out yet before we can see a break out that is convincing, as RBS strategists suggest that it may take some time before the choppiness of recent trading in FX is resolved, and a further period of USD weakness appears a significant risk over the coming week. “This may make it difficult to hold on to fundamentally based trades such as short AUD and long USD/JPY”.
We are back into the sideways channel formation for the week ahead of the close where support is confirmed at 91.30 on a double bounce. From the calendar, a number of data releases for Japan were released before the Tokyo fix with Japan's Industrial Production at 4.0% m/m vs 2.8% expected and Japan's Retails Sales for Jan at 1.4% vs 1.3% m/m and Year-on-year 4.4% vs 3.8% expected. Japan unemployment unchanged at 3.7% with the number of jobless declining in January for the 44th consecutive month. For AUD, we have seen Australian Private Sector Credit showing 0.4% m/m vs 0.5% expected. We are also reminded by the FX Strategists at the Bank of Tokyo Mitsubishi UFJ. that the partial indictors for Q4 GDP in Australia (which is out next Wed) have not been positive. The strategists said they are sticking with a 0.9% forecast but upside risks have now been removed. The sideways channel may have some more to play out yet before we can see a break out that is convincing, as RBS strategists suggest that it may take some time before the choppiness of recent trading in FX is resolved, and a further period of USD weakness appears a significant risk over the coming week. “This may make it difficult to hold on to fundamentally based trades such as short AUD and long USD/JPY”.