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9:18 AM · 16 January 2023

Chart of the day - AUDJPY (16.01.2023)

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AUDJPY is trading higher today, mostly thanks to the weakness of the Japanese yen. JPY is one of the worst performing G10 currencies today after the Bank of Japan conducted a bond buying operation aimed at pushing yields down. Bank of Japan will be in the spotlight this week as it is set to announce its next monetary policy decision this Wednesday at around 3:00 am GMT. While no change in the level of rates is expected, there were some hints that BoJ will conduct policy review and also look at side effects of its loose policy. Those media stories boosted market hopes for another hawkish move, following widening of a band around target 10-year yield. However, given BoJ's reluctance to raise benchmark rates and the fact that it keeps intervening at the upper band of target yield, it looks likely that the next hawkish move from the band will be further widening of the band. While we have to wait until Wednesday for the BoJ decision, AUDJPY may also see some moves during the upcoming Asian session as Chinese monthly activity data for December and GDP report for Q4 2022 are set to be released (2:00 am GMT).

Taking a look at AUDJPY chart at H4 interval, we can see that recent recovery move on the pair has been halted slightly below the mid-term downward trendline. The pair resumed drop later on and this pullback was halted before the lower limit of the local market geometry was reached, signaling that short-term upward trend, that was launched in late-December 2022, is still in play.

Source: xStation5

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