AUD/JPY drops to 13-day low around 74.20 as risk-off continues
- AUD/JPY registers losses for the seventh day in a row.
- China’s coronavirus, attacks on the US embassy in Iraq and the extension of the US tariffs on Aluminum, Steel add to the risk aversion.
- Aussie markets are off, no data at Japan could keep the rush to safety.
AUD/JPY extends the losses to 74.30, with an intra-day low of 74.19, during the early Asian session on Monday. The pair recently dropped to the lowest since January 08 as fears of China’s coronavirus join disturbing headlines from Iraq as well as from the Trump administration.
Iraq and tariffs join Coronavirus…
While China’s outbreak of the deadly coronavirus gains the top spot among the risk catalysts, attacks on the US embassy and the Trump administration’s extension to steep/aluminum tariffs also join the list.
Chinese authorities are struggling to tame the humanly transmitted virus that has so far claimed more than 57 lives and have affected +2,000 people. The inter-city transportations and the international flights are also under the radar, banned in some cities/regions, whereas the Lunar New Year holidays are extended till February 02 due to the same.
The US embassy is again being attacked with three rockets landing nearby the troops in Iraq. While the government at Tehran publicly opposes such action, likely from Iran, the risk is high that the US-Iran war could happen if situations worsen.
Also adding to the risk-off is the Bloomberg news that the Trump administration The expanded its trademark steel and aluminum tariffs to cover certain imported nails, staples, electrical wires and some downstream parts that go into automobiles and tractors, among other products.
With this, the market’s barometer of risk-tone, AUD/JPY, nosedives to fresh multi-day low even if the Australian bourses are off. It’s worth mentioning that the last week’s Aussie employment data have helped to cut the odds favoring the Reserve Bank of Australia’s (RBA) rate cut.
Amid no major data/event on the economic calendar, traders will keep eyes on the qualitative risk catalysts for fresh impulse.
A daily closing below an ascending trendline since October, at 74.20, will challenge the monthly low near 73.75 ahead of recalling the November bottom surrounding 73.35. Meanwhile, 200-day and 50-day SMAs near 74.30 and 75.00 act as nearby resistances.