The FX market's bellwether for risk sentiment, AUD/JPY, reached over ¥85 in May 2021.
04 Oct 2021
20 Jul 2021
18 Oct 2020
19 Oct 2016
21 Oct 2011
23 Oct 2001
The souring of risk appetite almost always sees the AUD/JPY pair push lower. The Australian Dollar normally strengthens when risk appetite is healthy while the opposite follows. As for the Yen, it’s the opposite. The Japanese currency will rise when risk appetite sours.
AUD to JPY had gained 8 percent in the first half of the year as commodity markets gain favour in 2021 with positive market sentiment associated with Joe Biden’s election win and vaccine roll-out news.
In the first weeks of May AUD/JPY had risen above ¥85, well past National Australia Bank’s prediction of ¥79 for the end of the first quarter 2021.
Aussie is benefiting from the Copper price surging above 9,000 for the first time in more than 10 years, on concerns about a global deficit of the metal and growth expectations.
Being a safe-haven currency JPY always enjoys a drop when risk sentiment improves, which typically means losses for JPY against other major currencies. JPY Outlook
The emergence of Evergrande and other significant roadblocks such as energy shortages in Europe and China impacting the global economic recovery throughout September prompted a shift in the underlying risk narrative, causing unfavourable conditions for commodity currencies like the AUD. AUD Outlook
Disclaimer: Please note any provider recommendations, currency forecasts or any opinions of our authors should not be taken as a reference to buy or sell any financial product.