|

CAD/JPY: Technical outlook and perspective of carry trade

CAD/JPY: Technical outlook and perspective of carry trade

The CADJPY currency pair, which expresses the value of the Canadian Dollar against the Japanese Yen, is one of the most classic risk-related pairs.

JPY is considered a safe haven because of Japan’s relative political stability, the country’s current account surplus and the active domestic investment community in Japan. Canada, at least historically maintained a wide interest rate differential from Japan, made CAD attractive from a carry-trade perspective.

The oil and gas industry is very important for the Canadian economy as an important export energy commodity for the country. Therefore, CAD tends to push higher on the back of oil prices which usually rise when increasing global risk sentiment and growth expectations. CADJPY is very sensitive to risk sentiment. The chart below shows the pair’s decline this year.

CADJPY

When global risk sentiment and growth expectations worsen, oil prices tend to fall, and CAD will be dragged down. Meanwhile, JPY tends to strengthen simultaneously as risk capital outflows from Japan are repatriated and investors seek security in safe-haven FX, including JPY, USD and CHF.

CADJPY

The intraday chart reveals a ranging market the last 4 weeks while today enters the 5th week. Ranging between a low of 78.00–79.68, the price has formed 3 times the same high price and 2 times the low price, so it can be concluded that the starting / sideway has formed a rectangle pattern. Nearest Resistance is at 79.00 and 79.68 next. A breakout of 79.68 could retest the 80.55 and 81.93. Nearest Support can be seen at 78.38 and 78.00, while breakout level at 78.00 will validate the decline to 76.50 and 73.80.

Share:

Editor's Picks

EUR/USD flirts with daily highs, retargets 1.1900

EUR/USD regains upside traction, returning to the 1.1880 zone and refocusing its attention to the key 1.1900 barrier. The pair’s slight gains comes against the backdrop of a humble decline in the US Dollar as investors continue to assess the latest US CPI readings and the potential Fed’s rate path.

GBP/USD remains well bid around 1.3650

GBP/USD maintains its upside momentum in place, hovering around daily highs near 1.3650 and setting aside part of the recent three-day drop. Cable’s improved sentiment comes on the back of the Greenback’s  irresolute price action, while recent hawkish comments from the BoE’s Pill also collaborate with the uptick.

Gold clings to gains just above $5,000/oz

Gold is reclaiming part of the ground lost on Wednesday’s marked decline, as bargain-hunters keep piling up and lifting prices past the key $5,000 per troy ounce. The precious metal’s move higher is also underpinned by the slight pullback in the US Dollar and declining US Treasury yields across the curve.

Crypto Today: Bitcoin, Ethereum, XRP in choppy price action, weighed down by falling institutional interest 

Bitcoin's upside remains largely constrained amid weak technicals and declining institutional interest. Ethereum trades sideways above $1,900 support with the upside capped below $2,000 amid ETF outflows.

Week ahead – Data blitz, Fed Minutes and RBNZ decision in the spotlight

US GDP and PCE inflation are main highlights, plus the Fed minutes. UK and Japan have busy calendars too with focus on CPI. Flash PMIs for February will also be doing the rounds. RBNZ meets, is unlikely to follow RBA’s hawkish path.

Ripple Price Forecast: XRP potential bottom could be in sight

Ripple edges up above the intraday low of $1.35 at the time of writing on Friday amid mixed price actions across the crypto market. The remittance token failed to hold support at $1.40 the previous day, reflecting risk-off sentiment amid a decline in retail and institutional sentiment.