Why You Should Care About Yen/Aussie Dollar

Here's the Yen/Aussie Dollar pair as it attempts to hold its breakout level. Momentum hasn't gotten oversold (yet) and prices remain above their breakout level, so the bias is still to the upside at current levels.

Click on chart to enlarge view.

With that being said, if prices do confirm a failed breakout that would actually be a positive sign for Equities and risk assets.

We referred to this indicator in August 2019 when it originally broke out to new highs, but let's review why it's important for those unfamiliar with its value as an intermarket indicator.

Within the G10 universe, the Aussie Dollar is the most commonly observed risk-on currency because it's levered to global growth. In contrast, the Japanese Yen is considered a safe-haven. This makes the JPY/AUD cross a great barometer for the global economy, and more importantly, the risk appetite of market participants.

Currently, this is just one of several risk appetite measures that have been underperforming and are improving and beginning to accelerate in the right direction. Others include the High Beta/Low Volatility ratio, High-Yield Credit Spreads, Stocks/Bonds or Stocks/Metals ratios, etc.

If you're a market bull, you want to see this continue into 2020.

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Thanks for reading and please let us know if you have any questions!

Allstarcharts Team