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AUD/JPY – Is Carry Back?
The Australian dollar has seen a remarkable turn in sentiment this week as the economic data proved more resilient than the market thought and allayed concerns that RBA would cut rates any time soon. As investors began to realize that the country’s 2% yield was safe for now, carry trade flows returned.
That has proven to be a boon for AUD/JPY which is now on the way towards the 86.00 level after making a nice double bottom at 80.00. With US data also proving to be mildly better than forecast USD/JPY seems to be well supported for now and that should allow the cross to move higher. Tomorrow’s NFPs could prove to be a real test of the rally. Even if US data surprises to the upside the Aussie may not decline much while USD/JPY could soar to the 115 figure which would prove very beneficial to AUD/JPY. Having now made a clear W bottom the pair looks well poised for further gains.