USDCAD Fades Lower with a Shift to “Risk On” as USDJPY Shifts Bullish

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• When last reviewing USDCAD and USDJPY in our 5^th September report, we highlighted that the intermediate-term bearish views were under threat.

• An improving backdrop to the US-Sino trade war has seen global asset classes shift towards more of a “risk on” environment, which has seen broader US Dollar weakness, BUT then an even weaker Japanese Yen.
• The USDCAD currency intermediate-term bearish view has been reinforced by the recent selloff into mid-September, down from below a key resistance at 1.3290, sustaining the intermediate-term bearish theme into late Q3.
• With respect to the USDJPY Forex rate, the shift to “risk on” has allowed for a probe above key 112.15, to shift the intermediate-term outlook from bearish straight to bullish.

USDCAD Negative theme intact

A rebound Friday but whilst contained by 1/3078 resistance we still see downside pressures from the Tuesday-Thursday plunge lower through numerous supports, keeping risks lower Monday.

We see an intermediate-term bearish theme.

For Today:

• We see a downside bias for 1.2983 and 1.2971/61; break here aims for 1.2915 and key support at 1.2883.
• But above 1.3046 aims for 1.3078 and maybe opens risk up to 1.3131.

Intermediate-term Outlook – Downside Risks: Whilst below 1.3290 we see a downside risk for 1.2814.

• Lower targets would be 1.2725 and 1.2536
• What Changes This? Above 1.3290 shifts the intermediate-term outlook straight bullish.

Resistance and Support:

1.3078	1.3131	1.3198*	1.3226*	1.3290***
1.2983/71/61	1.2915	1.2883**	1.2855**	1.2814**

4 Hour USDCAD Chart

 

 

USDJPY Intermediate-term bull shift above 112.15

We have stressed in September reports that “growing risk is for an intermediate-term shift to bullish above 112.15” and the Friday push above here sets an intermediate-term bull trend.

This positive price action also sets risks higher into Monday.

For Today:

• We see an upside bias for 112.17, above aims towards the 112.55/60 area, possibly closer to the key 113.14/18 cycle peaks.
• But below 111.73 opens risk down to 111.35 and maybe towards 111.09/01.

Intermediate-term Outlook – Upside Risks: We see an upside risk for xxxx.

• Higher targets would be xxxxxxxx, xxxxx and xxxxxx
• What Changes This? Below xxxxx shifts the outlook back to neutral; through xxxxxx is needed for a bear theme.

Resistance and Support:

112.17	112.55/60*	113.14/18**	113.55	114.00/03
111.73*	111.35	111.09/01**	110.71	110.36**

4 Hour USDJPY Chart