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FOREX: AUDJPY Soars 1.85% Pre-RBA as China Signals More Stimulus

FOREX
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  • Headlines from China on Monday hinted at looser monetary policy ahead, and the news has provided a boost to risk sentiment across currency markets, with the Australian dollar leading the G10 charge. We noted the monetary policy stance tweak and fiscal language used today reduces the odds of a meaningful move lower in the country's GDP growth target for '25.
  • In contrast to the firm rally for antipodean FX, the Japanese Yen is the weakest major currency, prompting a near 2% advance for AUDJPY.
  • Despite AUDUSD’s 1%advance, trend conditions remain bearish and resistance is at 0.6497, the 20-day EMA. This average has capped gains well in recent weeks.
  • Notably, Friday had the first daily close below the 0.6400 mark since November 2023, and leaves key support at 0.6350.
  • For USDJPY, today’s rally extends the most recent recovery to around 1.8% and spot is almost at identical levels to before the US election. Price action narrows the gap to initial firm resistance at 151.75, the 20-day EMA. However, the trend direction remains south, for now.
  • Fresh pressure on EURGBP saw the cross touch a low of 0.8269 to again trouble the twice-tested support from last week. We have noted across the past few weeks a clear area of demand in the cross, layered between 0.8260-87 that coincides with the range-defining support around the 0.8300 handle.
  • Analysts are expecting an unchanged RBA rate decision at 4.35%, before the focus turns swiftly to US CPI and the Bank of Canada Wednesday.
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  • Headlines from China on Monday hinted at looser monetary policy ahead, and the news has provided a boost to risk sentiment across currency markets, with the Australian dollar leading the G10 charge. We noted the monetary policy stance tweak and fiscal language used today reduces the odds of a meaningful move lower in the country's GDP growth target for '25.
  • In contrast to the firm rally for antipodean FX, the Japanese Yen is the weakest major currency, prompting a near 2% advance for AUDJPY.
  • Despite AUDUSD’s 1%advance, trend conditions remain bearish and resistance is at 0.6497, the 20-day EMA. This average has capped gains well in recent weeks.
  • Notably, Friday had the first daily close below the 0.6400 mark since November 2023, and leaves key support at 0.6350.
  • For USDJPY, today’s rally extends the most recent recovery to around 1.8% and spot is almost at identical levels to before the US election. Price action narrows the gap to initial firm resistance at 151.75, the 20-day EMA. However, the trend direction remains south, for now.
  • Fresh pressure on EURGBP saw the cross touch a low of 0.8269 to again trouble the twice-tested support from last week. We have noted across the past few weeks a clear area of demand in the cross, layered between 0.8260-87 that coincides with the range-defining support around the 0.8300 handle.
  • Analysts are expecting an unchanged RBA rate decision at 4.35%, before the focus turns swiftly to US CPI and the Bank of Canada Wednesday.