The Reserve Bank of Australia has now switched to a meeting-by-meeting basis in a copy of the Fed’s move in July. The key phrase was that the RBA is ‘not on a pre-set path’. This sent the AUD lower immediately after the meeting as it is the RBA’s way of trying to balance tackling surging inflation, but in a way that can respond to slowing growth.
The JPY has a pattern of strength during the summer months and the fall lower in US10 year yields on US growth concerns has been strengthening the JPY recently.
Notice too that the AUDJPY pair has a period of seasonal weakness ahead. Between August 02 and August 22 the AUDJPY fell a total of 11 times with an average fall of -2.24%. Will those falls repeat again this year?
Major Trade Risks: If China solves its property crisis and returns to strong growth that could boost the AUD. Also, the JPY could weaken if US 10-year yields rise again on aggressive Fed policy action.
HYCM clients can access the Seasonax product in order to analyse over 25,000 currency pairs, indices, commodities, as well as individual stocks. Please contact your account manager for a free trial. Certain products & services mentioned herein may or may not be available to all clients depending on which HYCM Capital Markets Group entity their trading account(s) adheres to.