The Australian dollar and subsequently the currency pair AUD/JPY, has long since been associated with the “risk on” trade.
In the broadest sense AUD moves higher along side equities and risk appetite, while The Japanese yen generally moves in the opposite direction.
Looking at the weekly chart we can see that AUD/JPY is just about to touch the 200 day moving average from below - in a clear and well established downtrend. This counter trend rally is very near completion and will likely coincide with a significant turn in risk appetite across equites as well.
Currency markets will always lead equities as the big banks and large scale traders are well ahead of the curve, while retail investors (glued to their televisions) continue to buy.
Watch for AUD/JPY to turn here in coming days and keep an eye on the correlation with U.S equities.
