This normally gives a good indication of what order books look like. Interbank dealers have been selling EUR/JPY and AUD/JPY this morning, setting themselves up for what might be a busy day. There is much speculation on what Japanese investment funds and retail trading accounts will do if interest rates around the globe continue to fall. Both these sectors are traditionally quite overweight foreign currency to benefit from the interest rate carry.
AUD/JPY is currently trading at 56.40, not far away from the trend low at 55.05 which was posted in October last year. A break below this latter level will see waves of stop-loss selling, potentially very large judging by some reports. Such an event might also be enough to drive USD/JPY below 87.00, a similarly decisive support level for that pairing.
