31 January, AtoZForex.com, London – At the beginning of the week, Barclays has shared its trade of the week: AUDJPY analysis and outlook for currency investor to consider.
Trade of the week AUDJPY
From a fundamental perspective, Barclays anticipates China’s PMI data to remain in contraction territory and expects a below consensus decline in the Caixin PMI print at 48.0 against the consensus of 48.1 with the previous reading of 48.2.
Softer data from China should weigh on China exposed currencies such as AUD. On the other hand, “although we expect no rate cut at the RBA’s meeting, we believe that the weak inflation outlook and the relative overvaluation of AUD will require easier financial conditions and see a risk that RBA rhetoric will be tilted toward an accommodative bias,” Barclays added.
From a technical perspective, Barclays remains overall bearish for AUDJPY. Given the stretched condition of daily momentum analysis,
“we would prefer to use counter-trend upticks as an opportunity to sell at better levels,” Barclays noted.
For the time being a nearby resistance in the 86.35 area provides selling interest.
“A move below our initial downside targets in the 83.50 area would encourage our bearish view for a move lower in range toward next targets near 81.45,” Barclays added.
Consider reading: Morgan Stanley: Weekly commodity G10 outlook
Meanwhile, resistance in the 1.0985 zone helps to keep Barclays focus lower on the Euro. A break below 1.0775 support would encourage a stronger bearish view towards initial targets near 1.0710.
Lastly, Barclays was wrong to expect selling interest near 118.90 to provide a cap, since the unexpected BoJ rate cut ignited further JPY weakness.
“Risk is for a move higher in range towards the 122.10 area, where we would look for signs of a top. A move back below the 118.85 area is needed to suggest scope for resumed downside towards 115.95/115.65,” Barclays concluded.
Think we missed something? Let us know in the comments section down below!