Listen to the latest market mood for the AUDJPY pair.
Weak AUD, Strong JPY
The medium-term outlook for the AUD is likely to weaken today as US President Trump is to hold a press conference on China later this afternoon and potentially announce fresh tariffs on China:
- Increasingly aggressive posturing from China and the US means further trade disputes seem almost inevitable now, Any action by the US or China would weaken the AUD.
- Australia is the most China dependent major developed economy and tensions have been mounting between the two countries. China is expected to tighten coal import rules by starting with shipments from Australia. This move is in addition to import bans on Australia’s beef and has weighed on the AUD.
Any risk-off tones from a US-China trade dispute will favour JPY buyers. Furthermore, other event risks in the background that may strengthen the JPY remain such as Brexit woes and skepticism around whether the euro relief fund will actually get done. Therefore we expect AUDJPY sellers at the market with tight stops above the 200DEMA on the daily chart.
We expect this outlook to play out over the next 1-3 days.
The main trade risks to this outlook are:
- Any positive US-China trade disputes news could invalidate this outlook and weaken the JPY and strengthen the AUD.
- Any absence of US-China trade action. If President Trump’s actions against China are seen as gentle or only rhetorical then AUD can still rise on global growth recovery hopes.