AUD/JPY bulls in charge as US dollar bleeds
- AUD/JPY bulls cheering the EU's relief package agreement and the slide in the US dollar.
- Bullish bets are off for the dollar currently, positive for yen and commodity complex near term.
AUD/JPY has been on the move this week as the risk-on tones filter their way through to the commodity complex, while at the same time, the greenback crumbles.
At the time of writing, AUD/JPY is holding close to the day's highest within a range of between 75.12 and 76.31, adding over 1% on the day so far at the current spot price of 76.08.
Additionally, the Reserve Bank has given the green light to bulls to take the Aussie higher and the combination of a weaker greenback has lifted the cross higher.
The yen has replaced the dollar in terms of parking space for safe-haven flows, owing to the nation's containment of the coronavirus as well as its currency account surplus.
EU Recovery Fund a set back for USD
Meanwhile, there has been a sizable shift in positioning in the FX space pertaining to the rally in EUR/USD In terms of the size of the Recovery Fund that EU politicians have agreed upon.
However, it is highly questionable as to whether the Recovery Fund would be sufficient to see the region through a second wave of COVID-19 and an associated period of lockdown, as analysts at Rabobank noted.
For now, however, the COVID-19 crisis appears to have been handled better than in the US and while there is still no rescue deal agreed in US politics, as well as potentially damaging tighter regulation under a Democrat President in the pipeline, bullish bets are off for the dollar currently.
Therefore, a lower dollar for longer is likely to continue to support the yen and leave AUD/JPY exposed to the downside should anything untoward be unveiled with respect to the coronavirus or the global economic recovery.
AUD/JPY levels