Forex Flash: AUD/JPY sits below long-term average – Westpac
FXstreet.com (Barcelona) - The AUDJPY remains a rare AUD cross rate that sits below its long term average. The 80- 90 range accounts for almost 25% of trade since 1983. "Both the AUD and JPY are strong in trade-weighted terms, though the yen is less stretched when adjusted for relative inflation rates (i.e. Japan's deflation has helped limit the damage to its exporters price competitiveness from low USDJPY)." states the Westpac Strategy Team.
The 2-year AU-JP swap AUDJPY spread has been very 0.75(unhelpful in providing(guidance for AUDJPY in recent years. However, the steady decline in AUDs yield pickup seems to be impacting the rollover rate of AUD uridashi bonds.
"The RBA's steady hand in November was a surprise move given the CB is now forecasting cooler growth in 2013 as mining investment peaks earlier than expected. Another steady hand in Dec would most likely see a break of the recent AUDJPY 86.44 high." the team adds. Markets have of course trimmed their expectations for RBA easing, but still project only a little short of a further -50bp from the cash rate over the next 6 months which is Westpac's base case.
The 2-year AU-JP swap AUDJPY spread has been very 0.75(unhelpful in providing(guidance for AUDJPY in recent years. However, the steady decline in AUDs yield pickup seems to be impacting the rollover rate of AUD uridashi bonds.
"The RBA's steady hand in November was a surprise move given the CB is now forecasting cooler growth in 2013 as mining investment peaks earlier than expected. Another steady hand in Dec would most likely see a break of the recent AUDJPY 86.44 high." the team adds. Markets have of course trimmed their expectations for RBA easing, but still project only a little short of a further -50bp from the cash rate over the next 6 months which is Westpac's base case.
Free Annual Reports
