JPY Rallying on Safe-Haven Demand
The reversal in risk sentiment we’re seeing this week is playing out very clearly in FX markets. Risk currencies are on the backfoot today as commodities and equities prices fall back in response to growing uncertainty over civil unrest in China. Given this backdrop, safe-havens are rallying today as traders look to divert capital away from riskier, higher-yielding areas into more defensive trades. JPY has been firmly today as a result and is making strong gains across the board.
CADJPY Falls As Oil Drops
CADJPY in particular is seeing heavy downside today and looks especially vulnerable to further losses given CAD’s relationship with oil. The Chinese oil demand outlook has fallen sharply amidst fears of a wider-spread security situation which might develop if the Chinese government chooses to crackdown even harder on protestors. Alongside this, fears over rising covid numbers and recently announced lockdowns are also hurting oil prices, putting downside pressure on CAD. While this dynamic continues to play out, CADJPY looks vulnerable to further downside in coming days.
Technical Views
CADJPY
The reversal in CADJPY from the highs around 109.70 has seen the pair breaking below the rising trend line and below the 104.52 level. The break at 104.52 is important given that this was the last swing low in the uptrend. Price is currently testing support at the 102.17 level and should we break below here, the focus is on a deeper correction towards the 99.09 level.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.