Chart of the Day: CAD/JPY. Trade wars, OPEC, and Oil dropping
At the time of writing the Nikkei is down -0.82%. The rhetoric concerning the trade wars with the US and China has kept going. Although, it hasn't yet materialised into a full 'risk off sentiment, the yen has still been gently bid overnight. Some of that may have been due to the earthquake in Osaka as well as the trade war rhetoric. The Asian session has followed the slide in US equities from the end of Friday's session.
The Canadian dollar has been under pressure from the continued fall in Oil. Oil fell heavily into Friday's close and that slide has continued overnight in the Asian session. Justin reported on that this morning. This is all due to OPEC meeting this week on the 22nd of June and is a key event to watch. The rumour has been that OPEC is going to raise production by 1m b/d. This morning on Bloomberg that number had reportedly risen to around1.5m b/d. This has undoubtedly weighed further on Oil, as hopes of a rebound disappear. Oil itself is a great chart to watch for a momentum play to the downside.
So we have our currency pair for the London session. Look to sell on a pullback of a fib drawn from Friday's session. The 84 handle looks a great place to short from as it is near the 50% fib level, at a minor resistance level and allows a sensible stop placement nice and out of the way at about 84.34. Have a look on the chart below , please ignore the green line on the chart, that is my short entry from further up as I have been playing the US/Canada trade war and dropping oil prices since last week on the 11th of June.
Risks to the trade: Trump making friends with China and dropping the trade war rhetoric. OPEC hinting at scaling back proposed production increases for the 22nd of June.