AUD/JPY
Well, it's been a wild ride since President Trump talked the dollar down last night. Overnight the Bank of China weakened the yuan by the largest single day devaluation in a year. The benefit of a weaker yuan for China is it forms a way of hitting back at the US imposition of tax on imported Chinese goods. The trade war is still in the background and risk off sentiment entered the market. Overnight the Nikkei fell , and is currently at -0.32% with the SSE and the SHI both recovering now and standing at +1.68 and 0.48% respectively.
The trade recently has been to fade the risk off sentiment, and that may be the case today, but it is worth thinking about the AUD/JPY chart in case we get a retrace back towards the 200 MA on the daily chart. Metals have been dipping recently with Copper and Iron Ore (Iron ore constitutes 3% of Australia's GDP) both falling.
Copper chart below - notice the falll since June as a fall in demand of base metals is anticipated with China's expected slowdown on the back of US tariffs.
Copper is down- 0.24% today
Iron Ore is down -0.43% today
So, pressure will further weigh on the pressured Aussie and the AUD/JPY should give us a double whammy if risk off sentiment prevails into the London and US session. Risk off - JPY strength. Trade war - AUD weakness.
Looking at the Daily chart there is a large bearish Engulfing bar with price rejecting the 200 MA. Risk can be contained above that level. Entries could be at the 4H first pivot at 83.04 or 4H second pivot at 83.42.
Have a great weekend one and all :-)
ForexLive
