CADJPY Sell Off Continues
CADJPY has been one of the best short plays of recent weeks, driven by weaker oil prices and a higher JPY. With global recessionary fears mounting as we push into the winter in the West, uncertainty around developing events in China, and a shift in USD outlook, JPY has emerged as the strongest currency in the G1O space this last week. CAD, meanwhile, has come under pressure along with other risk currencies this week, weighed on by the uncertainty and mixed action we’re seeing in equities and commodities. Furthermore, with the BOC nearing the end of its tightening program, CAD has lost support to other currencies which are being boosted by still-hawkish central bank expectations, such as GBP and EUR.
CAD Labour Data
Today’s CAD labour data will be closely watched ahead of the BOC meeting next week, the final meeting of the year. If no surprises are seen, today’s data should confirm the view that the BOC will take the opportunity at next week’s meeting to announce a pause to its tightening campaign, along with one final .5% hike. This should keep CAD pressured near-term. Only a surprise shift at next week’s meeting is likely to help dig CAD out of its current hole.
Technical Views
CADJPY
The sell off in CADJPY has seen the market breaking down below the bull channel and below both the 104.52 and 102.17 support levels. Price is now fast approaching a test of the 99.09 support level. While we might see some near-term bounce from this level as traders take profit on longs, the outlook remains bearish while the market holds beneath 102.17, keeping the focus on a further break lower.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.