Canadian Dollar Pulls Back Against Yen

At this point, I look at any significant pullback as a value play that you can take advantage of.

The Canadian dollar pulled back on Friday against the Japanese yen to reach the ¥101 level. The reason I am writing about this pair is that the Canadian dollar against the Japanese yen is an excellent way to trade the oil market in the Forex world. That being said, the most recent move has been more about the Bank of Japan and its quantitative easing policy, as they are trying to keep the 10-year JGB yield at 0.25% or lower. In other words, they have been “printing yen.”


The yen is a popular asset during turbulent times.

If we see the crude oil market take off to the upside, this might be the perfect vehicle to trade that market if you do not trade oil itself. Not only will you have the Bank of Japan helping you, but the Canadian dollar is a proxy for crude oil, as Canada exports so much of the commodity. It is worth noting that we formed a massive shooting star during the trading session on Thursday, at the ¥102 level.

Looking at this chart, we could drop down to the ¥100 level, which is a large, round, psychologically significant figure. It is also an area where we had pulled back from previously, so it does make sense that we may have to retest it for “market memory” going forward. A pullback to that area that shows signs of support might be a nice buying opportunity, depending on the daily candlestick.

The market has been very bullish for quite some time, but it is worth noting that the trajectory of the bullish run is at a lower angle than it had been previously. When you look at this chart, it does look like we are getting close to a top, but I think it is probably only a matter of time before we pull back. A pullback would be a good thing because the market has gotten far too ahead of itself. It is also worth noting that the most recent inflation numbers coming out of the Canadian government over the last week have been extraordinarily bullish for interest rate hikes, which of course drives up the Canadian dollar as well. At this point, I look at any significant pullback as a value play that you can take advantage of.


Leave a Reply

Your email address will not be published. Required fields are marked *

Risk warning: Trading Forex (foreign exchange) or CFDs (contracts for difference) on margin carries a high level of risk and may not be suitable for all investors. There is a possibility that you may sustain a loss equal to or greater than your entire investment. Therefore, you should not invest or risk money that you cannot afford to lose. Before using xMetaMarkets services, please acknowledge all of the risks associated with trading.

The content of this website must not be construed as personal advice. We recommend that you seek advice from an independent financial advisor.

The information on this website is not directed to residents of certain jurisdictions such as United States, Canada, Iran, Cuba, France, and some other regions, and is not intended for distribution to, or use by, any person in any countries or jurisdictions where such distribution or use would be contrary to local law or regulation.

© 2018 - 2024 All Rights Reserved.