Hi everyone - my first post on the forum. I thought the price action of CADJPY looked interesting these past weeks. Following yesterday's Bank Of Canada's Monetary Policy Report, keeping the rate unchanged I feel factors aligned for a short trade on the pair. This is in conjunction with Bank Of Japan raising rates from 0.25% to 0.5% on the 24th of January. One notable thing was Governor Macklem's remark - "C$ movement has not constrained us so far". I took that as implying that the BOC is not focusing excessively on stabilising the currency and is likely looking to prioritise domestic economic conditions over external pressures from currency movements. This could also create a negative feedback loop for the currency, as market participants may feel that the BOC is unlikely to step in and could lead to a larger selloff in comparison to the Yen, as the BOJ is put in a tight position and are playing catch up with inflation by raising rates. In conclusion, I feel that a short-term sell-off (next week(s)) is likely here. Average Fill 107.663 - SL 108.345. Let me know if any of you have any thoughts.
Interesting take! I personally find JPY quite unpredictable due to BOJ's often unexpected interventions and shifting policy stance. The rate hike is significant, but based on my experience, Yen moves can be erratic, especially with external risk sentiment playing a big role.
Yes, Yen does have that trait overall. But I feel there is a huge shift right now, especially with tariffs hitting so many countries but from the looks of it, Japan will come out unscathed as Trump is not threatening any tariffs to Japan. In addition to that, seems the headlines coming out from Trump's administration there's going to be a collaboration between US - Japan in terms of trade and this should bolster the Yen even further. I feel the tides are shifting and we will be looking at a much stronger Yen in the coming months.