Japanese Yen Rises, Australian Dollar Drops

Japanese yen has broadly increased since Asian shares have weakened. For example, HK HSI reduced -400 points (-1.5%). This might be caused by another threat sent by North Korea concerning a ballistic missile attack. Esuro Honda (Shinzo Abe's advisor) and Nobuyuki Nakahara (BoJ board member) stated that next Bank of Japan’s governor should have a different look at the policy, that will be able to refresh and improve it and also he should manage to withdraw the Bank from the stimulus. Haruhiko Kuroda’s term ends in April next year and the majority assume that someone else will take over.

Australian dollar has significantly declined as Reserve Bank of Australia once again stood pat and maintained the rate at 1.50%. Experts say that the economic condition requires some tightening. Still, real wages growth is soft and household debt is growing. Property market faced challenges as well.

Aussie/Yen's strong drop might suggest that recoil from 81.48 has finished at 86.97, while moving towards 88.21 resistance. 85.07 support is in the spotlight. Breach in that place will prolong the corrective pattern from 88.21 towards 38.2% retracement of 72.39 to 88.21 at 82.17. If AUD/JPY lifts, formation of a top at 88.21 will be closely watched.

Japan monetary base increased 17.0% yoy in prior month. Australian retail sales are up 0.6% mom in May. Today’s data is British construction PMI and Eurozone PPI. US market is closed on 4 July holiday.