InvestMate|CAD/JPY Will we go higher or is this already a peak?

2022년 10월 25일

CAD/JPY Will we go higher or is this already a peak?

🍁Unemployment remaining low at 5.2%.


🍁Inflation slowly slowing The latest reading on 19 October indicated 6.9% which, compared to the peak of 8.1% recorded in June, offers a breath of optimism.


🍁Interest rates definitely higher than in the EU. At 3.25%. With the next rate hike due on 10 October, the market assumes it will be a 75 basis point hike to 4%.


🍁Trade balance at a high of C1.52B in August. On 3 November we will find out how much it amounted to in September. Canada is now seeing very strong trade volumes. The highest in a decade.


🍁Manufacturing PMI low of 49.80 points.
tradingeconomics.com/canada/manufacturing-pmi

🍁The Consumer Confidence Index is falling but neither all-time highs nor a "crisis" state is just low at 48.51 points.
tradingeconomics.com/canada/consumer-confidence

🍁Will we see this reflected in the chart of these currencies?

🍁💴On the other side of the globe.

💴In Japan, no change.

💴Unemployment Rate low at 2.5%


💴Inflation low 3%. Japan is one of those countries that has not been hit by Inflation as much as Europe and the USA.


💴Interest rates at -0.1%. Still negative from 2016. Hence these falls in the Yen. When other countries raise rates causing their currencies to strengthen, their strength against the Yen increase.


💴For now, there are no increases on the horizon. The Bank of Japan says it has no intention of changing its monetary policy.

💴But the government doesn't want the Japanese Yen so cheap either, hence in recent days we have seen sharp falls which were interventions to stop the Yen weakening sharply against other currencies.

💴I don't think this will stop investors from pushing prices up again.

💴 Looking at the sytcajci of both currencies, I don't think anything has changed in the current trend over the months. The only threat could be unexpected monetary interventions to strengthen the Yen

📈Meanwhile on the chart.

📈On 21 October we made a double top and then after the intervention we went down into the support zone and there was a sharp overbought period.


📈Turning to the monthly chart, the first thing that catches our eye is a harmonic formation called gartley.

📈If the harmonic formation were to be fulfilled we can expect a rise to the range of the largest downward wave at the 0.786 level.

📈Assuming a stop below the post-intervention lows and a take profit at 0.786, this gives us a profit/risk range of 2.52.


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