Will CAD/JPY Close Above 105?

Will CAD/JPY Close Above 105?

Weekly Calendar Calls

Will CAD/JPY Close Above 105?

Fundamentals

For the next 24 hours we have our eyes on CAD/JPY. This evening Bank of Japan is scheduled to release the minutes from its most recent monetary policy meeting and since this was the meeting in which they surprised with more stimulus, investors will be watching the report carefully to see if it suggests that the BoJ will ease again. We expect the minutes to be pessimistically dovish, which on this holiday shortened trading week with low volume could lead to a larger decline in the Japanese Yen. At the same time, we expect Tuesday’s Canadian retail sales report to show an uptick in spending. Not only has job growth been healthy but wholesale sales also increased nicely in October.

Technicals

Today and Friday, CAD/JPY pierced but failed to close above the key 105 level. If the tone of the BoJ minutes and Canadian retail sales reports are as we expect, CAD/JPY should receive a nice boost that would take it comfortably above 105. Taking a look at the monthly chart, if 105 is broken, the next major level of resistance for the pair will be 107. On the downside, 103.75, the 61.8% Fibonacci retracement of 2007 to 2009 decline is support for CAD/JPY.

BKSWING – Place Order to Sell EUR/CAD at 1.4185, Stop at 1.4245. Close half at 1.4155, move stop to breakeven, Close rest at 1.4025

Swing

CAD has become deeply oversold because of the decline in oil prices but based on the uptick in job growth, increase in core prices and weakness of the exchange rate, Wednesday’s Bank of Canada monetary policy statement could be less dovish, leading to a much needed rally in the Canadian dollar. Canada is widely expected to raise rates after the Fed and before the BoE which makes the CAD a bargain particularly against the euro. Additionally, retail sales should surprise to the upside as the uptick in wholesale sales and rebound in job growth point to stronger consumer spending. To take advantage of the potential opportunity, we are placing the following pending order:

1. Place Order to Sell EUR/CAD at 1.4185

Stop at 1.4245

Close half at 1.4155, move stop to break-even

Close rest at 1.4025

We still have the following pending orders:

2. Place order to Sell AUD/USD at 0.8616
Stop at 0.8676
Close 1/2 at 0.8586, move stop to breakeven
Close rest at 0.8450

3. Place order to Buy EUR/CHF at 1.2055
Stop at 1.1995
Close 1/2 at 1.2085, move stop to breakeven
Close rest at 1.2200

***Remember, if 2 orders trigger without one hitting T1 first, all other orders are canceled