2 Jul 2013
Flash: Time to sell AUD/JPY? – Westpac
FXstreet.com (New York) - According to Global FX Strategist Sean Callow at Westpac, “The AUD/JPY seemed set for a bounce and as such we entered a long position at an average of 90.27, targeting the 94 area multi-week – following today's downbeat RBA statement, we closed out our position however.
“Our rationale for the trade was focused in large part on likely exhaustion of AUD/JPY selling, stretched speculative positioning and upside potential in data pulses both in Australia and Asia ex-Japan. Much of this has come to pass, including a two month high on our Asian data pulse index and stabilization on AUD/JPY after historically rapid decline.” Callow adds.
We had one key caveat, which we thought limited upside on the trade: Japanese selling of foreign bonds. This continues to pose a threat to both yen crosses and USD/JPY, with data through 21 June showing acceleration in the pace of Japan's net sales of foreign bonds.
“Our rationale for the trade was focused in large part on likely exhaustion of AUD/JPY selling, stretched speculative positioning and upside potential in data pulses both in Australia and Asia ex-Japan. Much of this has come to pass, including a two month high on our Asian data pulse index and stabilization on AUD/JPY after historically rapid decline.” Callow adds.
We had one key caveat, which we thought limited upside on the trade: Japanese selling of foreign bonds. This continues to pose a threat to both yen crosses and USD/JPY, with data through 21 June showing acceleration in the pace of Japan's net sales of foreign bonds.