By Giles Coghlan, Chief Currency Analyst at HYCM
AUDJPY to find sellers
The rationale is as follows, with COVID19 spreading rapidly across the globe and the World Health Organisation recognising that the US could become the new epicenter of the outbreak any short term recovery in the AUD is likely to find medium term sellers. The US economic relief bill has given a temporary boost to stocks, but sooner or later the seriousness of the COVID19 spread is likely to return.
The JPY is supported as a safe haven currency and once the market starts to see profit warnings, dividend cuts, and share valuations slashed then the JPY will once again find support.
Expect AUDJPY Sellers
Any return to the 69.00-70.00 band is likely to find medium term sellers.
Outlook Risk
The main risk to this set up is a medical headline which indicates that COVID19 can be treated or cured. This would invalidate this outlook and result in AUD strength and CHF/JPY weakness.
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