USD/CAD falls to the lows of the day but CAD/JPY is breaking out

USD/CAD is now 50 pips below the spike high on the soft Canadian jobs report.

The market is increasingly focused on the prospects for US stimulus and ignoring near-term headwinds around pandemic job losses.

There's this seemingly-unbreakable paradigm in markets where bad news is ignored as the market looks towards a idealized post-vaccine world. Couple that with governments spending like never before and central banks promising to keep rates low and every hiccup in markets begins to look like an opportunity.

I'm on board with that thinking, at least until we start to see if the post-vaccine economy matches the market's imagination (I think it will fall short after the initial boom). For now, though, none of that matters.

I think the US dollar is a good place to be because the economy there is going to be the best in the G10 this year. For CAD, the vaccine rollout is slower but there's also a strong stimulus bent and the multitude of knock-on effects from US spending. Then add in what looks like a spectacular bull market in commodities and it looks good, but probably better elsewhere than versus USD.

With that, CAD/JPY sounds like a great trade and then I match it up with the chart and it looks even greater.

USD/CAD falls to the lows of the day but CAD/JPY is breaking out