When two countries are competing for global demand via weakening currencies, who should be the first to blink? The country with the stronger economy……
AUD/JPY this week is a tale of two data sets.
In Japan, the jobless rate is lower than expected, inflation is higher (good news when deflation haunts the economy) and industrial production jumped 1% in April after a contraction in March. PM Abe’s The Arrows stimulus program is showing up in the numbers
In contrast, not only were Australia’s capital expenditure numbers worse than expected, capex intentions for 2015/16 fell. If the key question for the Australian economy revolves around the transition from a mining investment led economy to a broader base, the answer this week is “no”. And the daily chart may be rolling over:
Source: CMC Markets
Traders may watch the 94.45 level closely. Trading down through this level would point the way to a potential test of 93.75, with failure at the level opening the door to a move towards support at 92.00 and 90.50. Rebound resistance has come down toward 95.00 from 95.95.
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