I am fundamentally a bear on the AUDJPY. The Australian economy is based on commodity exports which are currently fundamentally weak, despite bullish reversals intermittently, depending on market uncertainty sentiment post-Brexit and The Australian Elections which are “hung”, American elections coming up. My bias is based on the contraction shown by economies in the Asian Block and the need for Australian commodities iron ore, corn, coal etc., and its biggest trading partners are China and the Asian block. Chinese and Japanese economies shows signs of slowing down/contractions, and both have had and will continue to have potential central bank interventions to prop up the economies, which i think might have short term effectiveness, but longer term will have little or no impact. India will also face headwinds due to the exit of Rajan, and a new governor which might show more receptiveness to political interference. This might also have a negative impact on their economy due to changes in fiscal and monetary policies. They are all affected by Europe and Britain and the effects of Brexit, which might lead to recession in those economies, and negative impact on the Asian block, directly impacting Australian economy.
My long term strategy – probably over a period of 12 -18 months, will therefore be based on looking for lower lows on the weekly and monthly charts at either the 72 level, and thereafter at the 66/67 level. The support has been at the following levels: 58.7 in 5/1995, 55 in 10/2000 and 9/2001, a further lower low in years 10/2008 and 1/2009, then in 5/2010, 10/2011 found support at 71.5, and then support at 72.4 on 24 June 2016 wich was related to post brexit.
I therefore see the near term uptrend as a pullback, but based on the fundamentals essentially bearish and will continue a downward trend as outline above. Please see the charts below for further notes.
Please leave me any comments – all input would be appreciated.