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CBA Eye Another Move Lower In AUD/JPY

AUD

CBA note that “volatility in the global bond market has recently surged to levels last seen during the 2008‑09 global financial crisis in the wake of the banking turmoil. By comparison, moves in the currency market have been relatively contained. AUD/JPY - one of the most volatile major currency pairs - fell modestly in line with the narrowing of the Australian‑Japan 10-Year yield spread since the collapse of Silicon Valley Bank.”

  • “AUD/JPY would have been much weaker if volatility in equities and commodities had also surged, and if safe haven demand underpinned the USD. That said, we consider AUD/JPY has scope to fall further. We expect the 10-Year Japanese government bond yields to recover from its current 0.30% to the Bank of Japan’s upper target of 0.50%. Or even higher to around 1% if the BoJ abandons its yield curve control program as we expect. By contrast, the 10-Year Australian government bond yields can fall further if we are right about the RBA getting close to the end of its tightening cycle.”
MNI London Bureau | +44 0203-865-3809 | anthony.barton@marketnews.com
MNI London Bureau | +44 0203-865-3809 | anthony.barton@marketnews.com

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