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A look at CAD/JPY
Long yen crosses has been a great trade since late August but the push back from central banks led to a retracement this week. Is it a blip or something more?
The moves in bond markets have been dramatic but in yen crosses that’s not the case, perhaps in large part due to the non-stop run in equities. The Nasdaq has run higher for eight straight days though so that leg of support is increasingly flimsy, at least in the short term.
Looking at most yen crosses, the retracement has been modest. There are some differences — and consistent selling in EUR/JPY — but CAD/JPY is one I want to highlight because it’s been such a sensational performer all year.
This week’s retracement is a retest of the old highs from June and 2017/18 double top. For now it looks like a classic retest of a breakout before a move higher. I suspect the drops in yields this week are squeezes and those moves are overdone but CAD and oil aren’t particularly strong seasonally in November so I don’t think there’s a rush to buy this pair.