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CAD Rate Outlook: CAD/JPY, AUD/CAD Levels to Watch

CAD Rate Outlook: CAD/JPY, AUD/CAD Levels to Watch

Justin McQueen, Analyst

CAD, CAD/JPY, AUD/JPY Analysis and Talking Points

  • Canadian Dollar Tracking Risk Sentiment, Month-End Flows Tout USD Selling
  • CAD/JPY to Remain Rangebound in the Short-Term
  • AUD/CAD the China vs US Sentiment Proxy
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Canadian Dollar Tracking Risk Sentiment, Month-End Flows Tout USD Selling

Canadian Dollar continues to hover around critical support at 1.3000 against the greenback, a level which the pair has rarely held below over the past two years. A key driver for the Canadian Dollar has been the equity market (S&P 500) and now with crude oil futures hitting multi-month highs following a 28% m/m rise, there looks to be some catching up to do for the Loonie. A factor to keep in mind for the CAD against the USD is month-end flows, where Citi’s FX rebalancing model is touting an above-average USD selling at the end of the month. With this in mind, risks are for a deeper setback towards the 1.2900 handle with a firm break below 1.3000.

CAD Rate Outlook: CAD/JPY, AUD/CAD Levels to Watch

Canadian Dollar Technical Levels

Support

Resistance

1.3000

-

1.3056

61.8% Fib (Sep 2017 – March 2020 rise)

1.2947

YTD Low

1.3155

200WMA

1.2924

2019 Low

1.3181

50DMA

For further analysis on USD/CAD, click here

USD/CAD BULLISH
Data provided by
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Change in Longs Shorts OI
Daily 3% 24% 10%
Weekly -3% 27% 7%
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CAD/JPY to Remain Rangebound in the Short-Term

CAD/JPYremains within a multi-month 78.00-81.00 range, which in the short-term looks set to persist. As noted above, commodity prices will continue to underpin the Loonie, however, with US 10yr yields remaining below 1%, the Japanese Yen has held firm despite the recent positive vaccine updates. That said, for the near-term outlook, range trading is likely to play throughout the rest of the year.

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CAD/JPY: Daily Time Frame

CAD Rate Outlook: CAD/JPY, AUD/CAD Levels to Watch

Source: Refinitiv

Support

Resistance

80.00

-

80.53

61.8% Fib

79.73

100DMA

81.00

-

79.25

50% Fib

81.49

Nov 9th High

AUD/CAD the China vs US Sentiment Proxy

The grind higher in AUD/CADhas shown little signs of abating as AU/CA 10yr spreads continue to move in favour of the Aussie. Alongside this, with the cross also a China (AUD) vs US (CAD) sentiment proxy, with the US lagging China in the COVID timeline given that the US is currently experiencing a second wave of virus cases, AUD/CAD has the grounds to keep pushing higher. That said, trendline situated slightly ahead of the 0.9600 will be in focus, where a rejection raises the likelihood of a dip back towards 0.9500.

AUD/CAD: Daily Time Frame

CAD Rate Outlook: CAD/JPY, AUD/CAD Levels to Watch

Source: Refinitiv

Support

Resistance

0.9550

-

0.9600-10

Trendline Resistance

0.9503

100DMA

0.9650

-

0.9466

50DMA

0.9695

YTD High

Top 10 Candlestick Patterns To Trade the Markets

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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