AUD/JPY vulnerable to further decline - Westpac

Sean Callow, Research Analyst at Westpac, notes that over the past month, the combination of the Bank of Japan’s steady hand and the RBA’s rate cut has sliced about 7 yen from AUD/JPY, leaving it struggling around 3 month lows.

Key Quotes

“The steady hand we expect from the RBA in June should provide modest support, while Australia’s activity data should not cause much damage. But the BoJ seems likely to wait until July before easing monetary policy again and Japanese demand for AU bonds faltered recently.

This leaves AUD/JPY vulnerable to further decline multi-week, towards 76.50. Losses beyond this level however are likely to require a significant rise in risk aversion.”