AUD/JPY to end the year trading at 74 – CIBC
01.09.2020, 07:00

AUD/JPY to end the year trading at 74 – CIBC

FXStreet reports that ongoing demand for Australian bonds by Japanese investors has marked a hit over the last month, helping AUD/JPY to reach levels above 77. Patrick Bennett from CIBC Capital Markets expects the pace of AUD gains to slow and forecast AUD/JPY trading at 74 by the end of the year.

“A shift in preference for geographical denomination of foreign bonds purchased by Japanese investors has been noticeable over recent months, with strong buying of Australian holdings featuring. The yield achievable for Japanese investors in Australian bonds has topped that available elsewhere, helping to underpin the market in both bonds and the currency. This shift was associated with a strong rebound in the AUD against the JPY, but that trend now looks to be topping out.” 

“AUD/JPY highs around 76.50-77.00 recorded in early-June and again in late-July are anticipated to mark the top of the near-term range. We forecast AUD/JPY shifting toward 74.00 by end-4Q and recommend shorts with stops above 77.00.” 

“The flare-up in Covid-19 cases in the state of Victoria appears to be being brought under control, though the impact is still not fully felt. Tensions between China and Australia are again feeding into a cautionary undertone for the economy and the currency. A complaint over dumping of wine in the Chinese market is the latest flashpoint.”

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