Japan Still Selling AUD
Japan’s retreat out of Australian dollar assets continues. This matters because Japanese investors hold enormous quantities of AUD – more than all FX reserve managers combined. AUD holdings of Toushin investors fell again in August, dropping 4.3% m/m. These investors have been steadily reducing their exposure for over a year now. Even aggressive BoJ easing on April 4 has failed to reverse the trend. The reason is clear – successive RBA rate cuts have systematically undermined the currency’s yield advantage, and the August cut inflicted further damage.
Read the full report: UBS