The Aussie has seen softness on Thursday against the Japanese yen.
AUD/JPY
The Aussie has fallen pretty significantly during the trading session against the Japanese yen, although I'd push back on the idea this has anything to do with the Australian dollar. It is essentially a situation where the Japanese strength has just overwhelmed everything else.
After all, the intervention that continues to support the yen is a major factor here, but technical traders will look at this, that the market that has been between the 115 yen level and the 110 yen level that rolled over from that area. So, despite the fact that it looks so ugly at the moment, really nothing's changed here.
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As we head into the Friday session, it'll be interesting to see how the nonfarm payroll announcement has an effect on dollar-yen. The US dollar against the yen is really the one that matters the most. This is a market that's still sideways, going back all the way to March.
Intervention Fears and the Carry Trade Setup
We are starting to see a little bit of a bounce back from here. There are a lot of concerns that the Bank of Japan may continue to intervene, and that could be true. But at the end of the day, the interest rate differential between pretty much anything and the Japanese yen is pretty wide.
The only better carry trade that I have at the moment is shorting the Swiss franc. So, I'll be looking at this as an opportunity to buy the Australian dollar.
The question is, will we drop all the way down to the 110 yen level where there is clearly a lot of support, and we have the 200-day EMA there?
I don't want to short this AUD/JPY pair. I'm not paying the swap. If I want to buy the Japanese yen, I might short the Swiss franc against it or something like that, so that I can at least mitigate the punishment every day of doing that.
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