Technical Analysis


Asian equities recover overnight, should provide relief for CAD

Last night the Asian equity market put in decent signs of a recovery. At least the fall has stabilised for now. See Justin’s post here

Oil has put in a decent overnight rally too and the combination of the receding risk off environment and recovering Oil price should see CAD being bid. Furthermore, the relief from NAFTA being decided hasn’t really resulted in much of a CAD bid yet. However, that positive sentiment is still around.

The US CPI data out this week was hit and miss. The headline inflation was a miss, but wages were higher. The headline miss gave the market a break and US 10yr yields didn’t break out higher as they may well have done on a strong CPI beat. So, there is likely a pause in the USD strength, at least for today.

So charts I like at the moment are USDCAD, CADJPY AND CADCHF. The USDCAD is sitting just under the 100 SMA level on the Daily chart, so technically an excellent place to enter short. (Please note the different references to SMA and EMA’s in the chart below)

CADJPY is bouncing between it’s 100 and 50 EMA, I favour an entry back from the 100EMA

CADCHF too has just rejected it’s 100 EMA and a retest just above of that level would be great entry with minimal risk.

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