Back
27 Aug 2013
AUD/JPY, as a gauge of risk, is forecasting something ominous in Syria
FXstreet.com (Barcelona) - The AUD/JPY has been weak for four months now, but a nascent corrective rally that started back on 8/7 is being cut short by an increase of safe-harbor Yen buying resulting from concerns in Syria.
The threat of military escalation by the US has the world on edge
Rumors of chemical weapon use by Syria were bad enough. But evidence of their use may soon be discovered by UN inspectors on the ground – which would only serve to confirm the evidence that was made public via social media outlets over the weekend.
All of this has the US government backed into a self-inflicted corner. Last August, President Obama called the prospective use of chemical weapons by Syria “crossing a serious line” that would require US military action. Apparently, Syrian leader Assad is not overly-concerned about US involvement - possibly emboldened by the back-up he’s getting from Iran and Hezbollah – and possibly delusions of grandeur akin to those experienced by other dictators like, Sadaam Hussein and Muammar Gaddafi shortly before their demise.
What is most unsettling in this case, though, is the back-up Syria apparently is getting from Iran. In the other cases, the dictators involved were fairly isolated and as such were easy targets for US Special forces. When you have Iran and who knows who else (read Russia) standing in the shadows providing back-up, it gives this confrontation a different feel – and it isn’t good.
The myriad of scary scenarios that could flare up out of this initial conflict is enough to force investors to safe harbor investments like the Yen. Normally, the US Dollar would be included in the “safe harbor” category, but it is being shunned in favor of the Yen due to the US’s likely involvement in any military operations.
The action late in the day Monday and thus far on Tuesday has been very clearly in favor of the Yen over all other currencies, but especially versus the “risk” currencies like the Aussie Dollar. The AUD/JPY was not in any bull market by any means, but it was showing signs of a bounce. But, when the Syria concerns heated up, the AUD/JPY slid from 89.25 to around 88.13 now.
Technical outlook for AUD/JPY
Technicians point out that key support for AUD/JPY does not come into play until 86.39. Shorter-term support, however, comes in at 87.40 – the low set last Thursday. Resistance for AUD/JPY comes in at 89.25 and then 90.06.
The threat of military escalation by the US has the world on edge
Rumors of chemical weapon use by Syria were bad enough. But evidence of their use may soon be discovered by UN inspectors on the ground – which would only serve to confirm the evidence that was made public via social media outlets over the weekend.
All of this has the US government backed into a self-inflicted corner. Last August, President Obama called the prospective use of chemical weapons by Syria “crossing a serious line” that would require US military action. Apparently, Syrian leader Assad is not overly-concerned about US involvement - possibly emboldened by the back-up he’s getting from Iran and Hezbollah – and possibly delusions of grandeur akin to those experienced by other dictators like, Sadaam Hussein and Muammar Gaddafi shortly before their demise.
What is most unsettling in this case, though, is the back-up Syria apparently is getting from Iran. In the other cases, the dictators involved were fairly isolated and as such were easy targets for US Special forces. When you have Iran and who knows who else (read Russia) standing in the shadows providing back-up, it gives this confrontation a different feel – and it isn’t good.
The myriad of scary scenarios that could flare up out of this initial conflict is enough to force investors to safe harbor investments like the Yen. Normally, the US Dollar would be included in the “safe harbor” category, but it is being shunned in favor of the Yen due to the US’s likely involvement in any military operations.
The action late in the day Monday and thus far on Tuesday has been very clearly in favor of the Yen over all other currencies, but especially versus the “risk” currencies like the Aussie Dollar. The AUD/JPY was not in any bull market by any means, but it was showing signs of a bounce. But, when the Syria concerns heated up, the AUD/JPY slid from 89.25 to around 88.13 now.
Technical outlook for AUD/JPY
Technicians point out that key support for AUD/JPY does not come into play until 86.39. Shorter-term support, however, comes in at 87.40 – the low set last Thursday. Resistance for AUD/JPY comes in at 89.25 and then 90.06.