AUD Weak on Retail Sales and Yen to Strengthen against Aussie

Australian DollarBased on the steady rise in the trade surplus of Japan in July, we speculate Yen to strengthen against the Aussie which is a commodity currency, in our report on October 10th, 2017.

We have also mentioned our readers to open a short position in the currency pair AUD/JPY near 86.60 and set a target of about 85.20. In addition to this, we also expressed our willingness in investing in the put option.

In a matter of one week, the currency pair declined as expected which in turn lead both the trades to profit. The currency pair is now back at 86.60 levels. We expect the pair to dip low again because of the reasons mentioned below.

The seasonally adjusted retail sales in Australia were relatively unchanged (0.0%) in July this year. It is followed by a downward revised growth of 0.2% in June and a rise of 0.6% in May. The analysts are of the opinion that retail sales would grow by a minimum of 0.2% in July.

Bloomberg TV Markets and Finance

According to Australian Bureau of Statistics, there was a decline in trade surplus to A$ 460 in July from A$ 890 in the earlier month. The reported figures were lower than the expectation of the analysts of A$ 930 million. In trend terms, Australia had a surplus of A$ 768 million in July, down A$ 250 million from a surplus in June this year.

Iron ore, which is regarded as one of the leading export commodities of Australia, fell 3% to end at three week low of $73.70 the previous week. Most of the analysts believe that raw material price for steel mill would remain between $60 and $80 for the remaining period of 2017 and would start a decline in second half of 2018.

Fear has been reignited of a major war in Korean peninsula because of the recent hydrogen bomb test by North Korea. It has boosted demand for safe-haven currencies like for instance Yen. The substantial current account surplus reported by Japanese Ministry of Finance also keeps Yen currency stronger. In July, current account surplus was ¥2.03 trillion up from ¥1.52 trillion in June and higher than the analyst’s expectations of ¥1.65 trillion. Hence, the decline in iron ore prices and weak retail sales is likely to turn the Australian dollar weak against Yen that remains strong on the rise in demand for safe-haven currencies and substantial current account surplus in July.

On a technical level, MACD indicator has dipped low below zero level. In addition to this, the currency pair AUD/JPY is also facing a resistance level at 87.20. Hence, we expect the current decline to continue shortly. On the downside, next strong support is located at 85.80.

AUDJPY Pair Sep 11th 2017

AUDJPY Pair Sep 11th, 2017

In the currency market, we recommend traders to open a short position near 87.20 and place a stop order above 87.80. The profits can be booked near 85.80. Similarly, a put option can be purchased to increase the returns. Traders should look forward to a strike price of about 87.20 and set the contract expiry date around 9th September.

AUD Weak on Retail Sales and Yen to Strengthen against Aussie
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AUD Weak on Retail Sales and Yen to Strengthen against Aussie
Flat retail sales growth and iron ore sell-off turn the Aussie weak against the Yen, which rises on geopolitical tensions and robust current account data.
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Rich Archer

Rich Archer

Hi, my name is Rich Archer. I am living in London. Welcome to Binary Manual. Reach to Binary Options broker reviews and market news here.

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