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Should We Be Wary of Further Downside Potential for the Canadian Dollar Against the Yen?

Market Report

Should We Be Wary of Further Downside Potential for the Canadian Dollar Against the Yen?

01.09.2023

Today's Highlights
  1. U.S. ISM Manufacturing Index
  2. European Manufacturing PMI

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 sharply 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 fell, with silver—which saw the sharpest decline—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 to a deficit of C$6.63 billion from the previous reading of a deficit of C$6.17 billion. The CAD/JPY pair fell from 108.115 to 107.301.It fell below the 200-period SMA on the hourly chart. On the daily chart, which is a higher time frame, the CAD/JPY pair remains above the 20-period MA, 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, just to be on the safe side.

Today’s economic indicators include the UK Nationwide House Price Index at 15:00, the Swiss Consumer Price Index at 15:30, the French Budget Balance at 15:45, the Turkish Manufacturing PMI at 16:00,4:30 p.m. for the Swiss SVME Purchasing Managers’ Index, 4:50 p.m. for the French Manufacturing PMI, 4:55 p.m. for the German Manufacturing PMI, 5:00 p.m. for the Eurozone Manufacturing PMI, 5:30 p.m. for the UK Manufacturing PMI,at 19:00, remarks by UK MPC member Pill and U.S. Atlanta Fed President Bostic; at 21:30, Canadian Real GDP and U.S. Employment Report; at 22:45, U.S. Manufacturing PMI; and at 23:00, the U.S. ISM Manufacturing Index are scheduled for release.We should pay close attention to the downside potential of the Canadian dollar, which is currently falling against the yen.

桜井 慶介

Author: Keisuke Sakurai

He has over 10 years of experience in FX trading. In the financial sector, he has been involved in investment management focused primarily on foreign exchange markets and has experience as an asset management advisor. Drawing on his extensive experience, he specializes in technical and fundamental analysis.

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