AUD/JPY broke out to the upside on Friday as it climbed 80 pips to the best levels of the year.
I have been watching this chart for a couple weeks as a great signal about which way the broader risk trade (and the global economy) would go. Despite the rally in stocks, Chinese stimulus and improved sentiment, there were plenty of worries elsewhere. Central banks have grown more dovish and economic data in most of the world has been poor to start the year.
The signal here is that global growth is going to turn. It's no surprise this break came after another round of Chinese lending data showing a flood of credit. The market increasingly believes that fresh demand is coming behind that and that a rebound in global growth will come in the second half alongside a China-US trade deal.
The measured target of the move is at least 83.00 with a chance to test the December high. Watch for a retest of 80.00 first.
Here's a video from a couple weeks ago where I talk about this chart: