- Offshore Yuan is strengthening fast, recovering 6.94 and 6.93 levels. PBOC advisor Sheng Songcheng said in an interview published this morning that Yuan breaking 7 will do more harm than good.
- PBOC cut Yuan’s fixing by 129 pips to 6.8988 per USD, a new low since December 2018 versus 6.8859 one day earlier via Yuan Talks.
- AUDJPY opens Week No. 21 in 2019 with a gap to the upside, 80 pips, from previous week’s close at 75.31 as the new Liberal-National coalition with Prime Minister Scott Morrison seems perceived by markets as a more progressive leadership.
Australian Dollar: Positioned to be the big winner this week?
“I often use the Australian dollar (FXA) versus the Japanese yen (JPY) as a proxy for the market’s risk tolerance. If AUD/JPY is rising, the market is bullish. If AUD/JPY is falling, the market is bearish. The correlation is not as consistent as I would like, so I use it with caution, caveats, and context.”
via Dr. Duru
The bottom seems in place for the AUD/JPY with a close last week at 75.31 level and judging from the news and market tone at the beginning of the week, other crosses including the AUDUSD, could be ready to favor long ‘Aussie’ positions.
Last week, our ‘Trade of the Week’ (TOTW) covered another relevant Australian Dollar cross; AUDNZD. You can review the trade idea (in the video below) and trade it as long as you understanding that the 1.0513 level seems to be the short-term bottom for the currency cross and it can also help you estimate your risk before going long (we got stopped out at -$480.00 loss).