Question about AUD/JPY

Beginner Questions
1

ok guys…

here’s my question

we all know that gold is record high right now and AUD is doing well.

What I dun get is how come AUD/JPY pair is still low compare to before when GOLD was at a lower price?

Am i missing something:confused:?

Thanks for viewing

2

Am i missing something

If forex trading was as simple as gold is high therefore AUD
is high then… you get my drift.

Maybe at the moment JPY is stronger than the AUD, or maybe
it is a relative equation when all the major currencies are taken
into account.

Also with JPY the carry trade comes into the equation.

Basically you need to look deeper, fundamentally & technically.

3

It works like this:

  1. first you have to understand what carry trade means
  2. Gold is high now, right, but have you read at least few articles why is it so high?
  3. after you have done the previous 2 you will be able to understand that:
    AUD/JPY is a carry trade influenced pair. Gold has something to do with aud, BUT in this case people trade it because of the interest rate differential.
    Therefore, AUD7JPY movements are more much like GBP/JPY and USD/JPY.
    Ofc what you said it right ( partially) the australian economy ( and AUD) are strongly based on gold price ( because they are the larger supplier of gold around), BUT JPY pair are not based “strongly” on fundamentals they rather respond to FEAR ( interest rate differential investments are considered risky)
    that is also why they are so volatile.
    If you immagine it from a trader’s perspective, if you fear that you will loose your money you will rather sell something that has a high risk ( all JPY pairs) and keep the safer one (GOLD).
    hope it helps.
    GL M8