k-sensitive currencies like the Australian and New Zealand dollar extended their slide vs. the Japanese yen for the second consecutive day, since Wednesday when the Federal Reserve officially signaled that they would hike rates “soon.”
The AUD/JPY seesawed at the announcement, though it remained within familiar levels. However, as Fed Chairhit the stage, he noted that the US central bank might raise rates in March. The signal was clear for investors, as risk aversion appeared while market participants scrambled towards safer assets. In the FX complex, flows went to the USD and the JPY.
In the meantime, US equities trade in the green at press time, reflecting a slight improvement in appetite. Nevertheless, month-end flows will keep the greenback and the JPY in the front foot until the next month. Fundamentally speaking, the AUD/JPY should be headed to the upside, based on central bank divergence. However, risk sentiment weighed on the Australian dollar. Also, the economic deceleration of China, and the People’s Bank of China cutting rates, signals nervousness of the communist party regarding the Asian giant economic outlook.The AUD/JPY depicts the pair as downward biased. Daily moving averages reside well above the spot price, around the 81.98-82.37 range.
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