TRADING EDUCATION: AUD JPY
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TRADING EDUCATION: AUD JPY

The AUD JPY is known within forex trading as simply the “Aussie-Yen”. The AUD JPY is considered to be a cross pair as it does not contain one of the three major reserve currencies.

 

Currently the fifth most traded currency on foreign exchange markets, the Australian dollar is often referred to as the “Aussie”. Whilst the JPY which is known within forex trading as the Yen is the fourth most traded currency.

 

Similar to other JPY currency pairs, like the GBP JPY and USD JPY, the AUD JPY is often associated with the carry trade. Where traders borrow low-interest rate currencies and invest in those with a significantly higher interest rate. In this case the Reserve Bank of Australia has favoured higher interest rates for the AUD whilst, due to stubbornly low inflation in Japan, the Bank of Japan currently has a negative interest rate. This means traders can under certain circumstances sell heavily in Yen to buy the Australian dollar.

 

However, the carry trade tends to fall off during global liquidity shortages which can lead to significant appreciation in the value of the JPY.

 

The Australian dollar is considered a commodity currency and therefore has a much heavier correlation with commodities than most currencies. This means AUD JPY traders must also be aware of changes in commodity prices such as Iron Ore, which accounts for 27% of Australian exports.

 

The price of Gold can have a significant effect on both the Australian Dollar and the AUD JPY as Australia is the world’s third largest exporter. As a result, the Australian dollar can have up to an 80% positive correlation with the Gold Price.

 

In terms of the Japanese economy traders should also take in to account the price of Crude Oil as Japan has no major Crude Oil reserves and, as a result, relies nearly entirely on imports.

CURRENCY PAIR CORRELATIONS: AUD JPY

AUDJPY weekly Correlations

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AUDJPY Daily Correlations

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Primary Trading Times For The AUD JPY

AUDJPY Day Volatility

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AUDJPY Trading Times

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PRIMARY IMPORT EXPORT SECTORS: AUD JPY

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