Listen to the latest market mood for the AUDJPY pair.

Strong AUD, Weak JPY

The medium term upside case for the AUDJPY pair remains.

The AUD as a pro-cyclical currency benefits from the vaccine hopes which are encouraging gains in commodities and equities as we start 2021. Both rising equities and commodities support the Australian dollar. Furthermore, China’s growth prospects of over 8% this year helps life the AUD. With Australia’s economy benefitting from its close economic ties with China the AUD is set to gain as China recovers. Finally, the Reserve Bank of Australia has stopped cutting interest rates and is set to remain on hold for the foreseeable future. All of this should help support the AUD medium term.

If markets remain calm then the JPY should stay weak on risk on tones.

Trade Risks:

  • The main risk to this trade is from any risk off trading on global growth weakness.
  • If the COVID-19 vaccine is shown to be ineffective this will invalidate this outlook.
  • Any sharp rise in US 10 year yields can sometimes spook equity markets.