AUDJPY Hit Retracement Level, Needs Reflation Jumper Cables

I'm revisiting the $AUDJPY currency pair. It just hit the 50% fibonacci retracement level and sold off (104 2008 high - 55 2009 low, hits 80). I wrote about the AUDJPY carry trade unwind, reflation trade and commodity currency relationship a few posts ago. The Australian Dollar bottomed out against the Yen and rallied hard as the reflation trade caught traction (or China restocking unwound the carry trade unwind - Baltic Dry Index On Fire, 1, 2, 3). China is a big importer of Australian commodities which requires Australian Dollars. With oil, gold and other commodities losing strength it could sink the $AUD. GOLD could sell off to the 200dma (875ish) if the risk aversion trade sticks for a while.

As you can see from the chart below, $AUDJPY broke through the 75.52 support level and could test the 38.2% retracement level (74.26) then possibly hit 70 if nothing can hold. C-bank moves and Japan fundamentals could also affect this pair. It will be interesting to watch and stay protected w/ stops. I'd probably hedge w/ ITM calls somehow. So will the Yen carry trade unwind unwind, unwind?

For better info and analysis visit these articles:

Barclays’ Englander Sees Room for Australian Dollar to Retreat (Bloomberg)
Dollar and Yen Extend Rally on Falling Stocks and Commodities (IBTimes)
Risk Aversion Spikes as World Bank Sees Deeper Recession (FXStreet)
Yen gains as uncertainty stalks market ahead of Fed (Guardian.co.uk)
Australian, New Zealand Dollars Decline on World Bank Outlook (Bloomberg)
Nikkei Plummets As Stocks See Massive Sell-off On Economic Woes (RTTNews)


AUDJPY (FXstreet.com)

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