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Chart of the Day: AUDJPY

When the markets go risk-off, it’s worth considering the safe havens against currencies other than the USD. Learn why AUDJPY was our forex risk proxy during US-Iran tensions this week.

After selling off in December, the Japanese yen was bolstered by escalating US-Iran tensions. AUDJPY’s Friday bearish candle shows how sensitive this pair was to news of the initial strike from the US: the pair traded 1.1% lower on the day, whereas USDJPY dropped only 0.5%.


The greenback behaves as a safe haven itself at times, so removing the USD from the equation can provide a cleaner read on JPY during event risk. The daily chart shows that AUDJPY proved sensitive to the news flow this week, providing trade opportunities as events developed.

At this point, President Trump seems to have backed down from his aggressive stance against Iran, with an “all is well” response to yesterday’s strike on a US-Iraqi airbase. This made markets more optimistic, and AUDJPY is recovering its losses.

Despite the uncertainty this week, stocks continue to fly, the S&P 500 and ASX 200 testing all-time highs once again. The stock market seems unstoppable. Pushing higher will give AUD another bid up.

AUDJPY’s considerable drop on Tuesday was helped by increased expectations of the RBA cutting rates at its February meeting, which weakened the Aussie across the board. The aftermath of the devastating bushfires will continue to weigh on the AUD.

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