Should investors be wary of the CAD/JPY’s upside potential as it approaches last year’s high, despite showing no correlation with U.S. dollar selling?

Should investors be wary of the CAD/JPY’s upside potential as it approaches last year’s high, despite showing no correlation with U.S. dollar selling?

22.01.2024

Last weekend, the Canadian dollar extended its gains against the yen for the fifth consecutive day, despite the fact that Canada’s November retail sales figures, released on Friday the 19th, deteriorated to a 0.2% decline from the previous month’s 0.7% increase.Amid a market trend of selling the yen and the U.S. dollar, the CAD/JPY pair rose from 109.712 to 110.326, significantly surpassing this year’s high. Since the pair is now just a hair’s breadth away from last year’s high of 111.091, investors should remain cautious about a potential rally to new highs following a correction.

European currencies fell as the pound weakened against the yen following the release of UK December retail sales data last weekend. The year-on-year figure deteriorated from the previous month’s 0.1% to -2.4%, and the year-on-year figure excluding automotive fuel also came in lower than the previous month. The GBP/JPY pair fell by approximately 2.5 yen, from 188.920 to 187.412.The decline halted as the pair found support at the 20-period moving average on the 4-hour chart. However, since the RSI on the daily chart is showing divergence, caution is advised regarding further declines.

Today, China’s prime lending rate will be released at 10:15, Malaysia’s Consumer Price Index at 13:00, Taiwan’s unemployment rate at 17:00,at 5:30 PM, Hong Kong’s Consumer Price Index; at 6:00 PM, the Philippines’ Retail Sales and Industrial Production; at 8:00 PM, Israel’s Manufacturing Production; at 11:30 PM, Turkey’s Central Government Debt; at 12:00 AM, the U.S. Leading Economic Index; at 1:30 AM, the U.S. 6-month Treasury bill auction; and at 3:00 AM, South Korea’s Producer Price Index growth rate.We should remain cautious regarding the upside potential of the CAD/JPY pair, which is approaching last year’s highs despite the lack of correlation with US dollar selling.