AUD / JPY battles Nikkei 225 strength despite risky environment. Will it break higher?
AUD / JPY, Australian Dollar, Nikkei 225, Crude Oil, US Dollar – News
- AUD / JPY often benefits from positive risk news but is struggling today
- APAC shares rise higher, having a rest well, but heights are a way out for now
- A risk-taking environment has not carried over to all markets. Where to go for AUD / JPY?
AUD / JPY attempted to move higher today on positive risk sentiment. Democrat Chuck Schumer said progress had been made in resolving the stalemate surrounding raising the US debt ceiling, and Russian President Vladimir Putin had made an offer to provide record oil and gas to Europe. There was no disastrous news on Evergrande and that allowed Asian stocks to have a positive day.
The US debt ceiling problem appears to have found a temporary solution, with reports that Democrats are ready to accept a Republican compromise that will delay settlement until December.
The Russian offer to supply Europe with record quantities of oil and gas was first made by Putin. Later that day, Russian Deputy Prime Minister Alexander Novak said one way to do this was to use the Nord Stream 2 gas pipeline that runs under the Baltic Sea. It has been built but is being held up in obtaining the necessary permits from the EU.
The potential for a significant increase in oil and gas production caused the energy markets to retreat from astronomical highs. Brent crude was lower at $ 77 a barrel.
The biggest boost to the positive news was stock prices, with a positive day for the Japanese Nikkei 225 stock index amid a red week. Hong Kong’s Hang Seng Tech Index rose 4.5% at times.
Yields were broadly unchanged and the US dollar was largely unchanged, barring some losses against somewhat buoyant commodity currencies. AUD / JPY and NZD / JPY are often viewed as risk barometers and these two crosses were subdued today. This could suggest that risk appetite may not be as broad-based as the bulls would like it to be.
Looking ahead, US initial jobless claims are still pending today, but tomorrow’s US non-farm payrolls will be a focal point towards the end of the week.
AUD / JPY technical analysis
AUD / JPY stagnated at a previous high of 81.312today for the third time. The cross has traded within a range of 77.897 to 82.028 since July.
The price is above the 10-day, 21-day, 55-day, and 260-day simple moving averages (SMAs) which could normally be bullish. However, the 55-day SMA is above the 21-day SMA and the gradient of both lines has yet to become positive. These factors can challenge the bullish momentum.
Resistance could stay at recent highs of 81.312 and previous highs of 82.028. On the downside, the lows at 80.009, 78.846 and 77.897 could offer support.
diagram C.read in TradingView
— Written by Daniel McCarthy, Strategist for DailyFX.com
To contact Daniel use the comments section below or @DanMcCathyFX on twitter