AUD/JPY under pressure, risk-off weighs

Discussion in 'Fundamental Analysis' started by FXStreet_Team, Apr 1, 2016.

  1. FXStreet_Team

    FXStreet_Team Well-Known Member Trader

    Oct 7, 2015
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    AUD/JPY is trading under heavy selling pressure in Asia, with sellers successfully capping the upside at 86.50 highs before a 50+ pips decline, sending the pair to print a day low of 85.77, as risk-off conditions set in.

    Risk-off flows outweigh AUD-positive data

    A proper understanding of market dynamics and how asset classes correlate with one another is required to understand today's unconventional moves in a pair such as AUD/JPY. With Japanese BOJ Tankan data worsening and Chinese PMIs coming surprisingly strong, one would image that AUD would benefit against the JPY.

    However, unperturbed selling in the Nikkei 225, down over 3%, (adding pressure on Yen crosses), together with buying interest for the DXY on risk-off flows (adding pressure to AUD/USD), has caused AUD/JPY pair, one of the most sensitive to risk averse conditions, to pay the consequences.

    China PMIs up, BOJ Tankan disappoints

    China's March Caixin manufacturing PMI came at 49.7 vs 48.2 expected and 48.0 last, while China official manufacturing PMI for March came in at 50.2 vs 49.4 expected and 49 last. In Japan, the Bank of Japan (BOJ) quarterly Tankan report, a survey designed to assess business conditions in manufacturing and service, came below expectations across the board.

    AUD/JPY key levels for today

    On the downside, key support is found at 85.75 region (low yesterday's Asian session + daily S1), ahead of 85.50 (ATR 14 limit), followed by 85.30 (daily S2). On the upside, 86.00 is first resistance (psychological round number) ahead of 86.20 (daily pivot) and 86.50/70 (mid-round/static resistance).
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