Selling Aussie / Buying Yen

One of the more decisive currency moves over the past 2 years has been the 50% rise in the AUD versus the JPY.

Today, it’s recording its highest level since November 2015.

This often watched indicator of risk-on/risk-off sentiment has reached an overbought level seldom seen and when coupled with its butting up against a resistance line, makes me think the ‘fat part of the trade’ has been had.

In the other chart below, I’ve overlaid the ASX 200 index and coincidentally it too is tickling a resistance line.

You see a nice companionship between the two.

So now, I’ll sell some AUD and buy JPY.

What to do then?

There are plenty of good Japanese businesses, not expensively valued and are conservatively operated which are carrying 20% of their market capitalisation in cash.

Mach 23, 2022

by Rob Zdravevski

rob@karriasset.com.au

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