BNPP: long on AUD/JPY
Analysts at BNP Paribas recommend buying AUD/JPY. The bank itself maintains a long on Aussie from 91.90, with a target at 96.00 and a stop loss at 89.95.
According to the bank, the pair will perform through most of the FOMC scenarios: “If the Fed refrains from tapering or delivers only a modest reduction in purchases, risk appetite should remain supportive for AUD/JPY. The cross would be vulnerable to a sell-off on a strong tapering outcome, which is quite unlikely in our view.”
As for JPY, BNPP expects Japanese August trade deficit to widen on Thursday, mainly due to higher imported energy costs. The specialists think, however, that recent data has been mostly positive for Abenomics. The consumption tax hike is likely to be announced on Oct. 1 and this should be JPY-negative.
Chart. Daily AUD/JPY