AUD accelerates while JPY falls

Risk currencies remained in favour through US trade yesterday as investors were encouraged by China data and Syria concerns waned.

US president Barack Obama has essentially reinforced what the market was expecting and helped ease fears that he would deliver a surprise on Syria. As it stands it seems the US is happy to pursue a diplomatic route to the problem and negotiations will continue to prevent further use of chemical weapons.

With that bit of uncertainty removed, risk currencies have edged higher in Asia while the yen has weakened. AUD/USD continued to rally through 0.93 and is now set to test the resistance range between 0.9320-0.9340. The positive local data theme continued, with Westpac consumer sentiment also showing strong signs of improvement this morning. However, this is not a key reading and we feel the pair is likely to be relatively range-bound ahead of tomorrow’s jobs data.

Jobs numbers on Thursday will be the key event for the AUD, with analysts expecting to see another poor reading; with the unemployment rate ticking up to 5.8% - another four-year high. However, improving global macroeconomic dynamics should be enough to encourage investors in the near term.

We continue to keep a close eye on AUD/JPY which rallied to highs in the 93.57 region and was trading at 92 just yesterday. This pair could really take off should the current dynamics in the global space continue to play out. USD/JPY has finally broken back above 100 and is currently hanging around 100.40. There is nothing major out of Japan today and it’s hard to see any major market moving data for the rest of the week. There is likely to be more movement from the USD side of the equation particularly with unemployment claims numbers due out tomorrow and Fed member Dudley set to hit the wires.

EUR/USD has remained buoyant and is on the verge of breaking through its overnight highs. There isn’t any major European data due out today but tomorrow ECB President Mario Draghi hits the wires and we also get the region’s industrial production data.  

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