CAD/JPY: Picking The Underdog
Neal Gilbert | Mar 19, 2015 04:37PM ET
The second half of the North American trading day wasn’t too compelling if you were watching charts as a healthy portion of traders were likely taking extended lunches to enjoy the start of the NCAA Tournament. Therefore the moves of the morning pretty much remained for the duration, but Asia is lying in wait to pick up the liquidity. On tap for the region is Meeting Minutes from the Bank of Japan, Reserve Bank of Australia’s Governor Glenn Stevens giving a speech, and a couple of minor New Zealand economic releases. The first two have a decent chance of moving markets particularly now that the world is up to date with the thoughts of the Federal Reserve.
Moving away from the US though may be a wise path to follow for the time being. After witnessing yesterday’s extreme market moves along with today’s reversal of those moves could mean that the market is still trying to figure out what the Fed really meant. In a nod to the aforementioned tournament, sometimes it is better to pick a market underdog to find opportunities, and Canada may qualify (particularly in comparison to the US). The CAD/JPY had an extreme move yesterday after the Fed meeting as well, and has retraced back to an interesting level that correlates with a trend line and a Fibonacci level.
Canada will be releasing a couple of market moving metrics tomorrow including CPI and Retail Sales that have a chance of being good for the CAD. So far this month, the Bank of Canada sounded more optimistic than anticipated, GDP was pretty decent, and Employment wasn’t as bad as expected; perhaps those good vibes could leak over to inflation and sales. If those fundamental factors combine with the former trend line resistance turned support, and 78.6% Fibonacci retracement of yesterday’s low to high, a rally back above 96.00 and beyond may be a possibility.
Source: www.forex.com
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