AUD/JPY slides by 1.4% on the day to 78.25, lowest since December last year
AUD/JPY is one of the key barometers for risk sentiment and it isn't painting a pretty picture since the start of the week, after slipping below the 20 July low @ 79.84.
The drop today also takes out the 28 January low @ 79.20 and that leaves little support all the way towards the 38.2 retracement level @ 77.98 next.
The aussie itself has already been in a troubling spot amid the virus situation in Australia but renewed concerns in the market on the delta variant globally this week - after having seen NZ enter into lockdown and the RBNZ putting off its plan to hike rates.
In European trading so far today, equities are coming under pressure with European indices posting hefty losses between by 1.4% to 2.8% across the board while US futures are also pressured lower by roughly 1% at the moment.
The yen is getting a strong tailwind as 10-year Treasury yields slide by 5 bps to near 1.22%, even outperforming the dollar now as USD/JPY falls from 110.20 to 109.50.
Going back to AUD/JPY, the drop now also looks to take out the 200-week moving average at 78.60 and given the underlying backdrop, it looks like we may see more pain to follow before the week comes to an end.
