FX:AUDJPY Australian Dollar/Japanese Yen
AUDJPY Daily – Since late November 2015, AUDJPY has been trading within a downwards channel. As we head towards the final quarter of 2016, investors will be focussing on the decisions of the Reserve Bank of Australia and the Bank of Japan who could both cut rates even further. Earlier this week, the RBA chose to keep rates unchanged but low inflation rates and a lower than expected GDP figure for Q2 could see the RBA cut rates for a third time before the end of the year. The past month has seen the Aussie Dollar making high gains as have started to regain losses and the Chinese economy has begun to stabilise but this means that it is more expensive to import from Australia which further strengthens the case to reduce interest rates. A weaker currency would also help the economy to stabilise further as well as increase foreign investment into Australian bonds. The Australian Dollar and Japanese Yen will both be affected by the decision of the and whether they still intend to hike rates this year. Koichi Hamada, an economic adviser to the Japanese Prime Minister Shinzo Abe has said that the Bank of Japan should wait until the US make a decision later on this month about whether to rate hikes or not because it could have a greater effect compared to any decision the Bank of Japan makes. The Bank of Japan governor said that they will continue to ease monetary policy until they reach their inflation target of 2% which could mean further interest rate cuts. The main issue faced by Japan currently, is that decision by the central bank are having an opposite effect with the Japanese Yen strengthening rather than weakening. This has heavily hit their economy with the GDP in the second quarter falling to 0.2% as they rely heavily on exports. Over the coming months, the movement of this pair will depend largely on decisions made by the US . With the Yen seen as a safe haven, further interest rate cuts or a weakening world economy would see AUDJPY falling towards 72.000. Alternatively, this pair could continue upwards as it has done recently and test the level of 80.000.