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12 Jun 2013
AUD/JPY advances capped near 91.50
FXstreet.com (Barcelona) - The AUD/JPY is edging higher in Asia trade, up 79 pips at 91.31 last but thus far still capped at resistance near the 91.50 level.
Position unwinding helping influence Yen strength
Greg Gibbs of RBS is of the opinion the recent sell off in the Nikkei, as well as the strong surge in the Yen could have more to do with position unwinding then worries over BoJ policy makers withdrawing liquidity. “A major part of the de-risking has followed from the Japanese markets correction. However, this has nothing to do with BoJ withdrawing liquidity. The BoJ is most definitely still on-course to supply liquidity. As such, we might expect a re-risking if/when Japanese markets settle down,” noted Gibbs. In further discussing his views, Gibbs went on to conclude, “We are not seeing much evidence of Japanese investor outflows and foreign hedge funds and investors are probably heavily exposed and getting squeezed.”
AUD/JPY path of least resistance remains lower
It should be noted that although the pair is starting the Asia session off on a strong note, technical indicators on the daily chart remain in bearish set up. First, price has not traded above either the 9 or 20 dma’s since May 23rd, which may be helping to fuel a sell the rally mentality. Also, the RSI (14) is sitting at the 27.80 level which is in the bearish zone between 20 and 60. Although this is an oversold reading for the RSI (14), there are no major ‘bullish divergences’ between price and momentum indicating there still may be more room to go before a bottom is found.
Position unwinding helping influence Yen strength
Greg Gibbs of RBS is of the opinion the recent sell off in the Nikkei, as well as the strong surge in the Yen could have more to do with position unwinding then worries over BoJ policy makers withdrawing liquidity. “A major part of the de-risking has followed from the Japanese markets correction. However, this has nothing to do with BoJ withdrawing liquidity. The BoJ is most definitely still on-course to supply liquidity. As such, we might expect a re-risking if/when Japanese markets settle down,” noted Gibbs. In further discussing his views, Gibbs went on to conclude, “We are not seeing much evidence of Japanese investor outflows and foreign hedge funds and investors are probably heavily exposed and getting squeezed.”
AUD/JPY path of least resistance remains lower
It should be noted that although the pair is starting the Asia session off on a strong note, technical indicators on the daily chart remain in bearish set up. First, price has not traded above either the 9 or 20 dma’s since May 23rd, which may be helping to fuel a sell the rally mentality. Also, the RSI (14) is sitting at the 27.80 level which is in the bearish zone between 20 and 60. Although this is an oversold reading for the RSI (14), there are no major ‘bullish divergences’ between price and momentum indicating there still may be more room to go before a bottom is found.