Westpac: Sell CAD/JPY: looking for another leg lower as risk appetite eases
Entry: Sell 100% at 84.30, Stop: 84.90, Target: 82.00
- Canada’s growth pulse appears to have firmed, some notable data points such as jobs and retail sales comfortably beating expectations. But, the turnaround in the complexion of Canada’s data has been such that our surprise index for Canada has hit unsustainable 5yr+ highs.
- Energy prices have now fallen 13% from their highs too and key equity indices have rolled, pointing to a long overdue correction/consolidation in risk appetite.
- CAD/JPY looks vulnerable to ongoing downside pressure amid the aforementioned risks. Given the very fluid backdrop for risk appetite at the moment we will actively reassess the prospects for this trade as it evolves. The US House vote on a new health care bill (Thursday) will be an important barometer for risk appetite. Canada’s Feb CPI (Friday) is also a key risk to watch.
Marketing communication : This document has not been developed in accordance with legal requirements designed to promote the independence of investment research and its author(s) is/are not subject to any prohibition on dealing in the relevant financial instrument ahead of the dissemination of the marketing communication.
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