- AUD/JPY has dropped further in an extension of the retracement from the opening bid’s highs this week at 83.97.
- AUD/JPY is in supply as risk aversion bolsters havens, and today’s Aussie GDP came in as a big miss.
- Aussie GDP came in at 0.3 % q/q ahead of the expected +0.6% q/q and prior +0.9% – 2.8 % y/y vs the expected +3.3% y/y and prior +3.4%.
If this result is not bad enough, the markets are in panic mode considering the mixed messages that have come of the ambiguity over the recent trade war truce between China and the US. The Aussie is highly correlated to such sentiment given its close trading relationship with China and its trade war truce breakout gap has just filled on the GDP data.
- Australia Q3 GDP misses, comes in at 0.3%
Cross flows take down AUD/JPY
The Aussie and high-betas have been spooked by the global equity selloff, and if Chinese stocks underperform, the Aussie is likely to keep shaking out speculative longs. USD/JPY is a coin toss considering the greenback picks up excess flows from risk-off positioning under these circumstances, as will the yen. Currently, USD/JPY has stabilized though which is holding AUD/JPY up to some extent at this juncture.
- Forex today sent dollar higher as markets turn risk off fearing Trump/Xi trade risks
AUD/JPY levels
The cross has filled the gap in risk-flow feeding into the yen and out of the commodity complex. The pair has taken out the hourly 200 SMA and is now embarking on a break of the 100 4hr SMA, extending the 4hr Bollinger band out. A Key test for the bears will be a close below the 21-D SMA which is located at 82.39 and RSI is turning south below OB territory as price moves to the middle of the daily Bollinger band’s width.
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