Look for further AUD/JPY gains - Credit Agricole

Stable risk index points to further gains

Credit Agricole CIB FX Strategy Research's Risk Index has moved into less risk seeking territory.

"From a broader angle our FX risk index remains stable in risk seeking territory. This is unlikely to change in an environment in which major central banks such as the Fed will remain data dependent, which suggests any increase in monetary policy expectations will be accompanied by better growth expectations.

In G10 FX currencies such as the AUD continue to be sensitive to risk sentiment, especially as RBA monetary policy expectations have been improving," CACIB notes.

In that regard, CACIB notes that the current reading of its Risk Index suggests that additional AUD/JPY upside seems likely over the coming few weeks, but with increased speculative positioning, CACIB warns that the pair may have increased whipsaw risk.

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