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CADJPY – Ready to Drop?
Tomorrow the market will get a glimpse of Canadian GDP and inflation data as well US Personal Consumption Expenditure reading which is the Fed’s favorite measure of inflation. Both data points could disappoint leading to a steeper selloff on CADJPY.
The loonie has already been hurt by less than hawkish comments out of the BOC and if the growth data shows a further decline -- or worse a negative reading -- USDCAD could easily scale the 1.2500 level and beyond.
Meanwhile, USDJPY has run into serious resistance at the 113.00 figure and with US yields starting to back up any soft reading in US inflation data could sow doubt about Fed’s ability to hike rates in December. All of this leaves CADJPY very vulnerable to a selloff especially because the pair appears to have found distribution at the 90.00 level. If it breaks to the downside, 88.00 could be soon in view.