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29 Jan 2016
AUD/JPY's rally sustainable?
FXStreet (Guatemala) - AUD/JPY rallied through the 4hr 200 sma and penetrated the 100 and 55 dmas when the BoJ has surprised markets and cut rates to –0.1% "The JPY has weakened as a result, but we downplay the longer-term effects of this policy change," explained analysts at TD Securities.
"The minority of analysts who were looking for a change this month were entirely focused on increases to the asset purchase programme. These expectations were conditioned on repeated dismissals of negative interest rates as a viable policy option for Japan by BoJ Governor Kuroda and other senior officials—as recently as several days ago."
This move weakened the yen significantly, with USD/JPY making a full recovery of the 2016 downtrend and exceeded the opening high of 120/.45 for the year and ran on through to 121.68. However, "While the BoJ rate cut has generated some interesting moves across markets in its immediate aftermath, we think its effects are likely to fade fairly quickly," explained the analysts at TD Securities. "We are bullish the JPY for structural reasons and see a decent chance that the BoJ's change in strategy could backfire."
AUD/JPY levels
AUD/JPY is testing the 55 dma at 86.18 and is on target towards the 88 handle. Daily RSI (14) has moved about 70 and suggests the cross is overbought. On an extension of the move, R2 is 85.80 on the way to R3 at 86.79.
"The minority of analysts who were looking for a change this month were entirely focused on increases to the asset purchase programme. These expectations were conditioned on repeated dismissals of negative interest rates as a viable policy option for Japan by BoJ Governor Kuroda and other senior officials—as recently as several days ago."
This move weakened the yen significantly, with USD/JPY making a full recovery of the 2016 downtrend and exceeded the opening high of 120/.45 for the year and ran on through to 121.68. However, "While the BoJ rate cut has generated some interesting moves across markets in its immediate aftermath, we think its effects are likely to fade fairly quickly," explained the analysts at TD Securities. "We are bullish the JPY for structural reasons and see a decent chance that the BoJ's change in strategy could backfire."
AUD/JPY levels
AUD/JPY is testing the 55 dma at 86.18 and is on target towards the 88 handle. Daily RSI (14) has moved about 70 and suggests the cross is overbought. On an extension of the move, R2 is 85.80 on the way to R3 at 86.79.