Both AUD/USD and AUD/JPY are trading mid range after a volatile start to the week. Asia traded a near 200 pip range of 0.8185-0.8364 whilst Europe has contained itself to 0.8254-0.8357; last at 0.8285. Sentiment remains negative but a lot of the IMM long positions were purged last week and whilst we don”t exactly by how much (data does not include Wed to Fri) UBS suggests all the longs may have been cleaned out.
This of course is only one segment of the market – the really big holders of AUD are of course Japanese retail investors (with rates near zero for 20 years you have to find yield somewhere). If they run for the exit door we could get back to 60 cents in a hurry.
All up though from here perhaps we should respect the 80-85 levels. One suspects there is no good reason for AUD/USD to be back trading above 85 cents in the current environment. However around 80 cents perhaps no reason to be short – UNLESS stocks crash.