Technical Analysis

AUDJPY the biggest mover today as risk trades dominate

With stocks down, bond yields down, currency flows are flowing to risk trades too

With the stocks down sharply, and yields down as well (on flight to safety flows), it is not surprising to see similar flows in the currencies.

The typical manifestation is a flight into “the relative safety of the JPY” (although I always questioned that move hence why I put in quotations) and flight out of risk. Since the big issue is US/China, the AUD is taking the brunt of the beating. The AUD is thought to be a proxy for China growth (and perhaps happy trading markets).  

Looking at the strongest and weakest ranking of the major currencies the JPY is the strongest. The AUD is the weakest.  That in turn, makes the AUDJPY the biggest mover. The snapshot shows it is down -1.56% on the day.  

What does that move look like on a chart?

Looking at the daily chart, the price low for the day has reached down to 75.80.    There is a channel trend line at 75.76.   Below that is the 50% retracement of the move up from the January “flash crash” low (am using Bloomberg data as the lows can vary).  There may be a cause for pause technically against the trend line/retracement area as a result of dip buyers sticking a toe in the water. However, I would not expect them to “love” the position given the market uncertainty.  They could get “lucky” though. The stocks slide is prone to corrections from a tweet/or WH comment.   We know Pres. Trump is teethered to the stock market.     

The AUDJPY is trading is testing a lower trend lineDrilling to the hourly chart below, the price today has reached below a lower trend line on the way to the lows.  The underside of that trend line comes in at 76.02.  A move above that level might give some relief to the downside momentum too, but until then, the sellers are in control.

The AUDJPY on the hourly chart.
PS. The Pres. meets with the Hungarian President at around 2 PM ET.  Typically, the Pres. takes questions.  The White House has not commented on the retaliatory tariffs by China.  What Pres. Trump says will be of interest to the market. 

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