6 months ago
Bitcoin's (BTC) bullish momentum has deed a snag this week for several reasons, including a weaker stateside demand. Now, the Australian dollar-Japanese yen speech complaint oregon the AUD/JPY pair, the classical hazard barometer, has turned southbound again, signaling caution to hazard plus bulls.
The Australian dollar (AUD), a commodity currency, is simply a proxy for planetary economical health, peculiarly for emerging markets and China. On the different hand, the Japanese yen (JPY) is seen arsenic a safe-haven currency that investors crook to during times of stress. Thus, a diminution successful AUD/JPY is considered a risk-off signal.
Matt Simpson, an expert astatine The City Index, summed it up successful his analysis arsenic follows: "As AUD/JPY is simply a classical barometer of risk, we should instrumentality enactment that each is not looking good astir existent levels. If AUD/JPY tanks, it’s apt to beryllium followed by hazard successful general."
A crypto bull mightiness brushwood disconnected the FX play arsenic a non-event, peculiarly against the backdrop of BTC's caller meteoric emergence adjacent to $100,000, but past suggests otherwise.
Remember precocious July and aboriginal August? The Japanese yen began rising connected rumors that the Bank of Japan (BOJ) was astir to hike rates, which it did astatine the extremity of the month. The AUD/JPY brace dropped implicit 8% to 98 successful July, hinting astatine a question of hazard aversion that kicked successful during the archetypal week of August.
BTC fell from astir $70,000 to $50,000 arsenic the yen spot led to traders closing bullish bets successful hazard assets funded by the inexpensive JPY-denominated loans. The AUD/JPY brace yet recovered a level astatine 90 and rebounded alongside different hazard assets.
Fast guardant to now, the AUD/JPY brace has dipped beneath the trendline, characterizing its betterment from the aboriginal August debased of 90. The breakdown points to a renewed spot successful the yen accompanied by a increasing chatter of a imaginable BOJ complaint hike adjacent month.
If that's not enough, markets are second-guessing the anticipation of the Federal Reserve cutting rates by different 25 ground points adjacent period and commercialized warfare fears are resurfacing with President-elect Donald Trump's plans to enforce the supposedly-inflationary tariffs connected Mexico, Canada and China.
"Expectations are increasing that the BOJ volition rise rates again successful December. This comes amid the prevailing presumption that the Fed volition support rates connected clasp astatine the December FOMC meeting," ING said successful a enactment to clients this week, adding it expects the BOJ to assistance the benchmark borrowing costs successful December.
"On 21 November, [BOJ governor] Ueda near the doorway unfastened for further tightening, stating that the BOJ would 'decide astatine each meeting,' fueling speculation of a December complaint hike," ING explained.
BTC bulls should support their eyes peeled for circular 2 of the yen-led risk-off scenario, which could perchance propulsion prices good beneath $90,000.
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