- The Aud/JPY maintains its position as it improves the feeling of the market after the high fire in the Middle East.
- Iranian media reported that the last missile bombardment was the last attack before the high fire entered into force at 4:00 GMT.
- The Japanese Yen strengthens as Japan Bank officials indicate support for greater hardening of politics.
The AUD/JPY continues to remain stronger for the third consecutive session, quoting around 94.50 during the Asian hours on Tuesday. The currency crossing receives support from the increase in appetite due to the risk since US President Donald Trump announced a high “complete and total” fire “between Israel and Iran. Iranian media say that the last missile waves were the last attack before the high fire entered into force at 4:00 GMT.
The feeling of the market is strengthened despite the attack of Iran’s retaliation in the Udeid, an American military base in Qatar. Qatar officials said that missile bombardment was intercepted and that the base had been evacuated in advance. The markets also reacted when Tehran decided to avoid attacking the Strait Strategic of Ormuz.
Trump’s comments arrived shortly after Iran shoot missiles against the Udeid Air Base in Qatar on Monday. Qatar officials said that missile bombardment was intercepted and that the base had been evacuated in advance.
The Global S&P data showed on Monday that the Australian Purchase Manufacturing Manager Index (PMI) remained constant in a 51.0 reading in June. Meanwhile, the PMI of Services rose to 51.3 from the previous reading of 50.6, while the compound PMI improved to 51.2 in June from 50.5 previously. Optimistic data attenuated the expectations of a short -term rate cut by the Australian Reserve Bank (RBA).
The bullish potential of the Aud/JPY crossing could be restricted as Japanese Yen (JPY) receives hard line signals from the officials of the Bank of Japan (BOJ), who cite the persistent underlying inflation driven by companies that transfer salary increases to prices as a reason for a greater hardening of politics.
The Minister of Economy of Japan, Ryosei Akazawa, is planning his seventh visit to the United States (USA) on June 26, which generates hopes of a commercial agreement between the US and Japan before the deadline of July 9 for the high reciprocal tariffs of the US.
FAQS risk feeling
In the world of financial jargon, the two terms “appetite for risk (Risk-on)” and “risk aversion (risk-off)” refers to the level of risk that investors are willing to support during the reference period. In a “Risk-on” market, investors are optimistic about the future and are more willing to buy risk assets. In a “Risk-Off” market, investors begin to “go to the safe” because they are concerned about the future and, therefore, buy less risky assets that are more certain of providing profitability, even if it is relatively modest.
Normally, during periods of “appetite for risk”, stock markets rise, and most raw materials – except gold – are also revalued, since they benefit from positive growth prospects. The currencies of countries that are large exporters of raw materials are strengthened due to the increase in demand, and cryptocurrencies rise. In a market of “risk aversion”, the bonds go up -especially the main bonds of the state -, the gold shines and the refuge currencies such as the Japanese yen, the Swiss Franco and the US dollar benefit.
The Australian dollar (Aud), the Canadian dollar (CAD), the New Zealand dollar (NZD) and the minor currencies, such as the ruble (Rub) and the South African Rand (Tsar), tend to rise in the markets in which there is “appetite for risk.” This is because the economies of these currencies depend largely on exports of raw materials for their growth, and these tend to rise in price during periods of “appetite for risk.” This is because investors foresee a greater demand for raw materials in the future due to the increase in economic activity.
The main currencies that tend to rise during the periods of “risk aversion” are the US dollar (USD), the Japanese yen (JPY) and the Swiss Franco (CHF). The dollar, because it is the world reserve currency and because in times of crisis investors buy American public debt, which is considered safe because it is unlikely that the world’s largest economy between in suspension of payments. The Yen, for the increase in the demand for Japanese state bonds, since a great proportion is in the hands of national investors who probably do not get rid of them, not even in a crisis. The Swiss Franco, because the strict Swiss bank legislation offers investors greater protection of capital.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
