Oil is on the move and with global sentiment in a slightly positive mood, CAD/JPY is a pair to watch for the next session or two.
Intermarket Snapshot
| Equity Markets | Bond Yields | Commodities & Crypto |
| DAX: 11235.09 +0.22% FTSE: 6829.97 +1.23% S&P500: 2649.00 +0.19% DJIA: 24635.06 +0.44% |
US 10-yr 2.733% -0.011 Bund 10-YR 0.202% -0.003 UK 10-YR: 1.266% -0.002 JPN 10-YR: 0.000% +0.005 |
Oil: 53.30 +2.52% Gold: 1307.20 +0.31% Bitcoin: 3401.20 -1.03% Etherium: 104.67 -0.76% |
Fresh Market Headlines & Economic data:
- Home prices rise at a slower pace: S&P Case-Shiller
- Treasury Secretary Mnuchin: Expecting ‘significant progress’ on China trade talks this week
- Brexit: Theresa May will ask the EU to reopen Brexit deal
- Brexit: Government supports Brady amendment on Ireland border
- Swiss trade surplus narrowed to CHF 1.79 billion in Dec. from a marginally revised CHF 3 billion in Nov.
- Australian business conditions and profitability collapsed at the end of 2018
- Oil prices rise after US imposes sanctions on Venezuela
- Gold scales eight-month peak on softer dollar, trade concerns
Upcoming Potential Catalysts on the Forex Calendar:
- Fed issues January Service Sector Outlook Survey at 3:30 pm GMT
- BOE’s Haldane attends panel in London at 5:30 pm GMT
- Japan Retail Sales m/m at 11:50 pm GMT
What to Watch: CAD/JPY
Without any schedule major economic events coming soon, and ahead of what could be potentially big developments from the U.K. on Brexit and the Federal Reserve meeting this week, volatility could remain subdued for the session.
But with today’s general positive sentiment, likely due to earlier good vibes on the U.S.-China trade talks story and net positive set of U.S. earnings this morning, selling yen makes sense until we get news to shift sentiment. And the Canadian dollar makes for an interesting counter currency as it does tend to move higher during risk-on days, plus the rise in oil today on Venezuelan sanctions by the U.S. could motivate traders to stay bullish on the Loonie.
Looking at price action on the one hour chart, the pair has been in a steady uptrend for the past week, creating higher ‘lows’, as well as seeing brief periods of indecision around the 82.30 -82.40 area. A retest here is one to watch and if the driving themes continue to lean towards positive sentiment and bullish oil moves, CAD/JPY bulls should think about long positions when bullish patterns and oversold stochastic conditions present itself. With a daily ATR of around 70 – 80 pips, targeting the 83.00 handle/previous swing high is a possibility for the next session or two, and with a stop just below the previous swing lows or 82.00 psychological handle makes for a great short-term potential R:R.
For the bears, if the driving themes change and risk sentiment gets very negative, then a break below the 82.00 handle is one to watch. Keep in mind that CAD/JPY is in a longer-term downtrend from the October high around 89.00 to January low around 78.00, so a big theme change would bring it back into a bigger move that could draw in more sellers fast. That’s a low probability scenario now, but it’s something to keep in mind.