ONE-TWENTY TWO - A collection of personal articles on financial markets including analysis you can use


Jan
2

The Australian Dollar And Japanese Yen Start 2014 Joined At The Hip

written by Dr. Duru
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On December 27th, I wrote “The Australian Dollar And Japanese Yen Enter 2014 Joined At The Hip – A Split Could Be Telling.” So I find it very intriguing, interesting, and validating to see 2014 start with a dramatic example of the shared hip joint between the Australian dollar (FXA) and Japanese yen (FXY).

Since trading began for 2014, the yen and the Aussie have experienced two sharp bouts of strength. These episodes neatly coincided with each other as shown in the 15-minute chart below using the GBP/JPY (British pound versus Japanese yen) and GBP/AUD currency pairs.


Two sharp displays of strength for the yen and Australian dollar

Two sharp displays of strength for the yen and Australian dollar


The chart below for AUD/JPY shows that in between the simultaneous bouts of strength, the Australian dollar and yen switched positions of dominance. The end result at the time of writing is exactly where the pair started the year.


A lot of wiggles, but absolutely no net movement

A lot of wiggles, but absolutely no net movement


Source: FreeStockCharts.com

With the Japanese stock market (NKY) closed and the S&P 500 (SPY) experiencing a rare tumble to start the year, this synchronicity between AUD and JPY becomes even MORE intriguing to me. I will be watching the unfolding relationship even more closely….Stay tuned.

Be careful out there!

Full disclosure: long GBP/JPY, short GBP/AUD, long AUD/JPY, long SPHB, long SPLV, long SSO puts

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