JPY crosses still likely to provide most market leads
I’m presuming that we don’t get any major economic or political statements out of the EZ, and if we don’t then the Yen crosses look like the most likely causes of volatility. The move higher in USD yields have given the USD/JPY a bid tone and this could move over to the crosses as well.
- AUD/JPY has broken up out of a consolidation phase (see chart) and could quite easily now enter a retracement phase which would take it back towards 95. The fact that the Chinese credit crunch seems to be a managed event by the PBOC should reduce panic and cause an oversold market to start short-covering.
- EUR/JPY is less of a clear case (see chart) with both currencies likely to suffer in the short term, but we could easily see a move back towards 131.00 in the short-term.
- CHF/JPY is not a pair I look at very often but if you really want to buy the Yen, this looks like the best risk-reward play (see chart)?
Obvious conclusion is that I should be buying AUD/CHF; best I go have a look!