Canadian Election Risk Strategy
Updated
We are going to dig deeper into the fundamentals and technicals for CADJPY.
For the Fundamental side we have the US sneezing and with investors quick to diagnose it means CAD will also suffer and begin to weigh heavy on the crosses as we enter into election mode.
On the BoC side, they have been sat on the sidelines all year long with rates stuck at 1.75%. Polloz notably jawboning wariness around global tensions in trade and softening outlooks while markets are pricing only 15bps of easing through 2020. For the Canadian elections I don't see any reasons for material change in medium and long term outlooks with some upside risks should conservatives win.
On the BoJ side its crystal clear that Japan are starting to show benefits from trade diversions in Asia expect further evidence of this to continue in PMIs and keep Kuroda sidelined. Continue to feel comfortable leaning on JPY in the medium term with risk showing no signs of abating.
For those tracking the Daily chart in CADJPY and USDJPY:
Leveraged funds modestly selling CAD with large accounts completely unaware this negative positioning for CAD is around the corner.... In any case, for the technical flows today we have a very easy one to track;
=> LMT OFFER @ 80.75 | TP 79.10 | SL 81.75
Best of luck all those in CADJPY and other CAD crosses, thanks for keeping the likes coming!
For the Fundamental side we have the US sneezing and with investors quick to diagnose it means CAD will also suffer and begin to weigh heavy on the crosses as we enter into election mode.
On the BoC side, they have been sat on the sidelines all year long with rates stuck at 1.75%. Polloz notably jawboning wariness around global tensions in trade and softening outlooks while markets are pricing only 15bps of easing through 2020. For the Canadian elections I don't see any reasons for material change in medium and long term outlooks with some upside risks should conservatives win.
On the BoJ side its crystal clear that Japan are starting to show benefits from trade diversions in Asia expect further evidence of this to continue in PMIs and keep Kuroda sidelined. Continue to feel comfortable leaning on JPY in the medium term with risk showing no signs of abating.
For those tracking the Daily chart in CADJPY and USDJPY:
Leveraged funds modestly selling CAD with large accounts completely unaware this negative positioning for CAD is around the corner.... In any case, for the technical flows today we have a very easy one to track;
=> LMT OFFER @ 80.75 | TP 79.10 | SL 81.75
Best of luck all those in CADJPY and other CAD crosses, thanks for keeping the likes coming!
Note
We may struggle to get filled here after the gap down via Turky / Syria ... we'll see how it plays out for the next couple of hours before opening a new decision.Trade active
Note
A good time for a chart update: Note
=> We will open a decision point here tomorrow for the Weekly closeTrade closed: stop reached
"Both lead to USD decline and improve the US relative competitive position. However, an important side note for those in USDJPY and CADJPY short positions…if we do see a game changer (highly unlikely) currency deal with US-China entering in a new “Plaza Accord 2.0” we will see JPY weakness across the board. Risks for such a scenario are increasing, here endorsing all to remain on-guard to this." [check]Was also obvious we should not be holding this one any longer once we broke out to the topside of the channel... a good attempt.
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