Kay Van-Petersen
Kay Van-Petersen, macro strategist at Saxo Capital Markets, digests the market action seen in week 43 and gives his tactical positing. Van-Petersen favours a USD step back, sees gold consolidating, and believes that European equities are overheated.
Medium term
Trade view / 14 September 2016 at 12:35 GMT

BoJ may pop cap in CADJPY

FX Consultant / IFXA Ltd

The CADJPY downtrend intact since April 26 was broken at the beginning of September with the move above 78.85. That rally was capped at 80.30 and since then CADJPY has declined steadily to 77.50, just above the bottom of 77.30 which survived numerous probes since August 8. 

The intraday downtrend was broken yesterday with the move above both 77.90 and 78.15.

Yesterday’s Nikkei Asia Review report that the Bank of Japan would make its negative interest rate policy the centrepiece of future monetary expansion has raised expectations for another round of stimulus from the BoJ at its September meeting. That should support USDJPY.
Oil price movements have dominated USDCAD trading but as long as WTI remains above $42.30/barrel, USDCAD gains will be limited. The Bank of Canada may have delivered a slightly dovish policy statement, but Canadian interest rates aren’t going anywhere. 

Stable oil prices and the risk of additional easing from the BoJ should lead to an attempt by CADJPY to pop the cap.

Management and risk description

This trade is fraught with risks including another bout of risk-aversion trading which would trigger the stop-loss. It is also vulnerable to renewed oil price weakness below the uptrend line.

CADJPY 30-minute with break of downtrend lines and second buy level shown :
Source: Saxo Bank 
CADJPY four-hour highlighting stop-loss and take-profit:
Source: Saxo Bank  

CADJPY 5 year daily with moving averages:
Source: Saxo Bank


Entry: buy ½ CADJPY at market (77.95) balance at 77.55 .

Stop: 77.25.

Target: 79.90.

Time horizon: seven days.

— Edited by Michael McKenna

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Non-independent investment research disclaimer applies. Read more
14 September
izwansamba izwansamba
Tq mikeee
14 September
Pandorra Pandorra
Hi Michael.. due to oil dropping and CAD popping is ur CADJPY trade view still in play?
Many thanks.
15 September
Pandorra Pandorra
Hahh.. thanks Michael for no social expected respond. third.. third trade view for yen in a single day resulted with negative sl, after couple in usjpy. japanese eclipse indeed.
15 September
Michael O'Neill Michael O'Neill
Hi Pandorra. I apologise for failing to respond earlier but I was unavailable.


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