The Australian Dollar and Japanese Yen pair are among the most popular scalping tools. Due to the huge issue of the Japanese currency, the high amplitude of quotations is observed throughout the entire trading session.
A platypus is depicted on Australian coins with a face value of 20 cents, and on 5 cents coin - echidna. Australia also prints polymer banknotes for more than 15 countries, including Mexico, Thailand, Romania, Singapore, and Indonesia.
When European settlers first arrived in Australia in 1788, a barter system was used as a currency, including the possibility of paying with rum.
Although the Australian dollar and Japanese yen are stable currencies in the global investment market, they do not have the status of the main currency pair. Japan and Australia have very close trade partnerships; however, the yen has a much stronger pegging to the US dollar than the Australian dollar.
This means that any change in the American economy can have a significant impact on the AUD/JPY pair. As with most pairs of Australian dollars, the most successful way to make a profit is a fluctuation in commodity prices.
Such a solution is especially relevant for currency duets since Japan relies heavily on the export of Australian manufactured goods. Periodically, the market provides an opportunity for traders to trade these two currencies as a carry pair.
The name “yen” translates as “round object” or “circle”. This is due to the perfectly round shape of the coins. In Japan, citizens call the Japanese yen “Okane,” which means “money.”
This currency was officially adopted by the Meiji government with the approval of the New Currency Act of 1871 in the hope of stabilizing the monetary situation in the country at that time.
Before the yen, Japan used the old complex currency system. After the devaluation of silver in 1873, the yen lost its market price compared to the US dollars and Canada, which adopted the gold standard.
Subsequently, in 1897, the market value of the yen was 50 US cents. For this reason, Japan adopted the gold standard, and this allowed to stabilize the national currency.
Due to the size of Japan and its geographical location, any natural disaster will have a serious impact on the country, which will affect the exchange rate of the yen.
Since the Australian currency is considered to be quite stable, the Japanese yen sets the trends in the AUD/JPY pair. Therefore, it is not surprising that the economic events in Japan and Southeast Asia as a whole have a strong influence on quotes.
The AUD/JPY pair is popular with those who use the carry trading strategy. This is because Japan has low interest rates, and in Australia, they are high.
Another bonus is that regions have overlapping time zones. Both of these factors mean that any assumptions that the interest rate in any country will be changed will lead to a disproportionate effect on both currencies.
The difficulties in conducting technical analysis and the lack of accurate and reliable data on the financial situation of trendsetting Japanese companies make the pair not the best choice for beginners.
Simple strategies, in this case, will not work, since it is necessary to study the market as a whole and trace the relationship with the US dollar and the Chinese yuan.
Also, traders will have to deal with quotes of such indices as, KOSPI, SET50, TOPIX. They demonstrate the current situation on the yen most clearly and help to predict how the exchange rate will behave.
But do not think that it is enough to understand only with this part of the question. Australia is one of the largest exporters of gold and other valuable commodities.
Demand for these assets is quite volatile and depends not only on the mood in the global economy but also on the specific state of some industrial sectors. For example, gold is actively used in high-precision engineering.
The development of this industry is guaranteed to lead to an increase in demand for gold and the stabilization of the Australian dollar. But do not forget that most of the enterprises involved in this area are located in Japan. This means that the yen will also strengthen its position.
As you can see, a simple surface analysis is not enough to accurately understand the situation and understand how to trade this pair. Difficulties turn away many traders, due to which this direction is not overloaded with quotes and does not become a target for artificial pumps and influence on the situation.
Therefore, the main advantage of AUD/JPY is stability. Traders who prefer trading with minimal risk often choose this pair. It is easier to spend time exploring once and delve into the topic than to constantly worry about unforeseen trend reversals and the risk of losing a deposit, which is typical for highly profitable pairs.