AUDJPY & DAX Daily Analysis (08/052016)

I have a short term bullish, long term bearish view on AUDJPY and therefore I am bearish equities also. AUDJPY is an extremely good indicator for risk sentiment and intraday movements are well correlated, therefore, with the indices (Nikkei has an extremely high positive R^2 figure with AUDJPY). Looking at AUDJPY from a volume standpoint, you can see that we are in an area of low volume. Price has tested these levels before and has rejected this area. Ideally price wants to get up to Y84.000 to facilitate trade for a move lower.

Fundamentally speaking, iron ore prices are still in a downtrend longer term while Yen is still bid. Ideally Kuroda wants Yen to weaken in order to reduce the deflationary effects on the Japanese economy that they are currently experiencing (alongside other issues such as an aging population, which is also a deflationary pressure). I’ll be looking at purely downside plays on both assets.


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