Investors should watch for further downside potential in the Canadian dollar, which is falling against the yen

Investors should watch for further downside potential in the Canadian dollar against the yen

01.09.2023

Yesterday, the three major U.S. stock indices posted mixed results, with stocks trading sideways, interest rates falling, and crude oil prices rising. WTI crude oil surged to $83.50. Natural gas, on the other hand, faced resistance at higher levels and traded in the $2.75 range. All five major precious metals declined, with silver falling the most, dropping back to $24.40.

In the foreign exchange market, the Canadian dollar fell against the yen after Canada’s second-quarter current account balance, released yesterday, worsened from the previous reading of a deficit of C$6.17 billion to a deficit of C$6.63 billion. The CAD/JPY pair fell from 108.115 to 107.301, dropping below the 200-period simple moving average (SMA) on the hourly chart.On the daily chart, the CAD/JPY pair remains above the 20-day moving average, but the RSI is showing a bearish divergence around the 53 level. Therefore, we should remain cautious about a potential decline during U.S. trading hours.

Today’s economic indicators include the UK Nationwide House Price Index at 3:00 PM, the Swiss Consumer Price Index at 3:30 PM, the French Budget Balance at 3:45 PM, the Turkish Manufacturing PMI at 4:00 PM, the Swiss SVME Purchasing Managers’ Index at 4:30 PM, the French Manufacturing PMI at 4:50 PM, the German Manufacturing PMI at 4:55 PM,the Eurozone Manufacturing PMI at 5:00 PM, the UK Manufacturing PMI at 5:30 PM, remarks by UK MPC member Pill and remarks by US Atlanta Fed President Bostic at 7:00 PM, Canada’s Real GDP and US Employment Report at 9:30 PM, the US Manufacturing PMI at 10:45 PM, and the US ISM Manufacturing Index at 11:00 PM.We should pay close attention to the downside potential of the Canadian dollar, which is currently falling against the yen.