Day four: our CAD/JPY trade

There has been reasonable supply coming in to CAD/JPY after Tuesday’s strong day. 

Japan
Source:Bloomberg

However, there also seems to be some buying though coming back into the pair around 95.30 and this can be seen more prominently on the four-hour chart.

Following on from my trade idea yesterday, staying on the four-hour chart, there is good horizontal support seen around 95.20 area, with this representing the range of highs from June 24 to July 1. Just below here, the 38.2% retracement of the rally from 93.43 (on June 6) to the recent high of 95.58 (at 94.76) looks like good support, hence I would look at potentially moving stops on the idea just under here at 94.65.

At 22:30 AEST we get the US payrolls report, which could give the CAD a bit of a lift if we see a strong print (market currently expects 215,000 jobs to be created). However, given we saw a strong ADP payrolls report in the US last night and saw no real buying of CAD, it makes a lot of sense to feel that the Canadian trade balance figure will be a much bigger driver. Economists expect the deficit to narrow a touch, so an unexpected trade surplus would certainly be welcome for those holding long positions.

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