CADJPY price has sold off aggressively in the past few weeks, with the pair falling to 73.85 – a zone last seen in 2011 – before rebounding somewhat. WIll the pair resume decline as oil prices decline?
18 March 2020 | HYCM – I came across this Bloomberg piece on the Market’s Live Blog this morning making a historical case for further CADJPY downside as follows.
The case for further CAD downside
Canada has a strong export oil market, so the fate of the CAD is tied up with the movements in oil. With OPEC discussions breaking down and Saudi Arabia planning to boost its oil production in April to capacity this has led to heavy pressure in the crude market.
CADJPY Price in the ’90s
The CADJPY pair going back to the 1990s has been down as low as 58. This was when spot oil was around the $20 point. It is circled in red on the chart below.
So, all of this makes sense for further CADJPY downside. Selling at the market, or pullbacks make sense and a target of 71.50 in the near term.
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