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Day two: our potential CAD/JPY trade

I held off from looking at long trades yesterday given the daily candle seen on Friday and the risk that we could have seen a reversal. This hasn’t played out.

Japan
Source:Bloomberg

Following on from my potential trade idea yesterday, the RSI has pulled back from overbought conditions and there seems to be good buying coming into the cross on moves to the 94.80 area. Given the trend I feel there are upside risks and a break above the June 26 high of 95.17 would be positive.

I feel long positions at current levels (94.90 at the time of writing) could be positive, and traders could look to place a stop loss at 94.10 (just below the 20-day moving average). I will target a potential move to the 96 handle.

The overnight read on Canadian GDP (+2.1% yoy versus +2.3% eyed) did little to promote CAD selling, however today’s Japanese Q2 TANKAN report at 09:50 (AEST) could be very interesting for JPY traders. The survey measures a range of businesses and will focus on capital expenditures and also how businesses see future trading, inflation and the break-even level the JPY required for their businesses. This makes this survey extremely important for the BoJ and any traders of Japanese assets.

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