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
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.
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
| Change in | Longs | Shorts | OI |
| Daily | 23% | -8% | 4% |
| Weekly | 57% | -19% | 3% |
DailyFX Economic Data and Events Calendar
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.
CAD/JPY: Daily Time Frame
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
Source: Refinitiv
| Support | Resistance | ||
|---|---|---|---|
| 0.9550 | - | 0.9600-10 | Trendline Resistance |
| 0.9503 | 100DMA | 0.9650 | - |
| 0.9466 | 50DMA | 0.9695 | YTD High |
