Has CADJPY reached its peak?

June 17, 2015

It has been a fairly quiet session in Asia, although the aussie and kiwi have fallen victim to souring commodity prices. Overall, the market’s focused on events in Europe and the US at the moment, with the threat of a Grexit building at the same time as investors prepare for tonight’s policy meeting at the Fed.

One interesting pair from a technical perspective is CADJPY, which is showing some signs of weakness. The pair has sent most of the year attempting to regain some loses from late 2014/early 2015, but it has found some sticky ground around 100.00. There is also some bearish divergence between price and RSI which may concern CADJPY bulls and lead to a break of its upward trend.

In the event that the pair breaks through 100.00, it may find some further support around 99.50 and then 98.40. On the upside, we’re watching 101.15; a break of which would negate our MT bearish bias and may see price make a run for 101.60.

On the fundamental side, there’s some important economic data out of Canada later this week and a policy meeting in Japan. Later tonight Canada releases wholesale sales numbers (exp. 0.3% m/m) and on Friday inflation and retail sales numbers are released. The market is expecting headline consumer prices to have risen around 0.5% m/m and 0.8% y/y and core prices to rise 0.3% m/m and 2.1% y/y. Meanwhile, retail sales are anticipated to jump 0.7% m/m. In Japan, the BoJ should maintain the status quo during this week’s policy meeting, which should limit its impact on the yen.

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