Ichimoku Kinko Hyo CNH/JPY: The CNH/JPY pair is trading above the Kumo…
AUD: going pre-crisis
Information is not investment advice
This week, the AUD has been one of the strongest currencies on the Forex market. Currently, it is at pre-crisis levels against the JPY and the USD. Trading this high, it is testing the long-term downtrends at 0.7000 for the AUD/USD and 76.00 for the AUD/JPY. The question is, even if it does break it, what are the odds that it keeps going upwards?
The main driver for the advance of the AUD is the good management of the virus in Australia, which had minimal direct impact compared to other countries. After that, there is a timing factor: tied to China, the Australian economy was the first one to start the recovery while the rest of the world is still shrugging off the dust of devastation. As the Chinese economy is strong and quick to get back to full capacity, the AUD has that as guaranteed support for the upside. However, such a scenario when the AUD is winning over the rest of the world will not stay long: once other economies, primarily the US, are back to capacity, the balance will get back to pre-crisis status quo where the AUD is a weak link. That means, several months ahead, possibly until the US election is finished, the AUD may enjoy the weakness of the USD. But in the long-term, closer to the very end of 2020, the USD will reassert itself as the Forex central pillar, and the fundamentals will be settled down. Then the AUD will again be under pressure.
The first FOMC meeting comes after a buildup of anticipation from traders and investors alike, as the markets await what posture the Fed will take regarding the interest rates; would there be a hike or a cut in interest rates? Recall that the Federal Open Market Committee had previously ended the year 2022 with a 50bps hike, and an indication from Powell, the committee chairman, that the Fed could consider raising interest rates by 75bps in the course of the year 2023.
Western countries are trying to find other options for oil and gas supplies after a 10th package of sanctions, which will put more pressure on Russian oil and decrease global oil supply. Italy, for example, is in talks with Libya.
Last year was tough for the Japanese yen. USDJPY gained more than 30% over 2022, striking above 150 in October. While anticipation of slower Fed rate hikes pulled the pair below the 130 level at the start of 2023, the speculations over the destiny of BOJ’s yield control policy grabbed the attention of the Japanese assets in the middle of January. What lies ahead for traders of the Japanese yen?