- AUD/JPY has dumped on the back of an escalation of trade wars with a twist.
- AUD/JPY is down -0.22% at the time of writing, printing fresh lows since 23rd May at 75.41 for a -0.45% decline on the day.
On the back of a risk-off start to the end of the week, the FX markets risk barometer was falling heavily in Asia due to the recent announcements from Trump who is hitting Mexico with on the 10th June with tariffs on all imports to the USA. Trump said the US will increase tariffs up to 25% between now and Oct if the nation does not make material efforts to stop the flow of illegal immigrants across the U.S. border. This followed Pence saying in the US session that the US could double tariffs on Chinese if need be.
More on the fiasco here: Breaking: Trump steps up the ante on trade wars by imposing tariffs on Mexican imports, (MXN – 1.85%)
Meanwhile, the Aussie has been thrown around as well, initially recovering from the headlines only to be faded and put back into its place, considering that none of this is good news for world trade and the commodity markets for which the Aussie trades as a proxy to.
The yen, on the other hand, has gone to town with this, rallying vs the greenback to 109.22, so far, +0.28% at the time of writing – While that may not be so impressive on a stand-alone move, USD/JPY is back into negative territory and far cry from the overnight session highs up at 109.92. With the RBA around the corner, and with US PCE on the cards tonight, there is plenty to play for in the cross at this juncture.
AUD/JPY levels
On the wide, the 127.20 Fibo tallies up quite nicely with the 3rd Jan lows at 74.07 as a downside target – the Fibo comes in around 73.87. 75.33 was the recent swing low on 17th May. On the upside, in a fast market, as this is, a retracement of the knee jerk downside to the noise has already been met, being the 50% mean reversion at 75.57. A further retracement will open 75.78 to complete the range of the day.
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