AUD / JPY jumps 20 pips to trade above the 76 level on Tuesday. Westpac economists see limited downside risks for the Aussie against the Yen and forecast the pair at 77 in September and at 79 by year end.
The Japanese yen continues to show limited sensitivity to risk appetite, although it has admittedly not been tested often in recent weeks. But the price action so far in 2020 suggests a reduction in downside risk on the AUD / JPY if turbulence returns in the weeks and months to come.
“When it comes to containing Covid-19, Australia and Japan face new epidemics, but our basic economic forecast assumes Asia’s recovery is intact and the Australian economy will rebound faster. than that of Japan. “
Meanwhile, the BoJ has accelerated the expansion of its balance sheet since March. The relative trend in QE therefore seems to support AUD / JPY, even if it is partially perceived. ”
“Our baseline forecast is 77 in September and 79 in December.”