Though volatility is a natural component of CAD/JPY trading, the pair’s range and Friday’s close just below resistance is too tempting a technical setup to pass up. The range is clearly defined by a number of fib retracements falling perfectly into place, as well as a few ancillary technicals contributing their own barrier to price action. Fundamentally, this pair is a risky trade considering the relatively full Canadian calendar. However, with the holiday’s fast approaching, volatility in risk trends is more and more likely to cool as major trading desks work with skeleton crews.
[B]Trading Tip[/B] – Though volatility is a natural component of CAD/JPY trading, the pair’s range and Friday’s close just below resistance is too tempting a technical setup to pass up. The range is clearly defined by a number of fib retracements falling perfectly into place, as well as a few ancillary technicals contributing their own barrier to price action. Fundamentally, this pair is a risky trade considering the relatively full Canadian calendar. However, with the holiday’s fast approaching, volatility in risk trends is more and more likely to cool as major trading desks work with skeleton crews. The suggested strategy is considered aggressive as each lot carries 70 points of risk and the stop is set close above resistance. Conservative traders can reduce their position size and widen stops to improve their probabilities for a successful trade and the overall risk of the position. If spot hits 110.50 before our entry orders are executed, we will cancel all floating orders. For those that follow the Pair to Short-Term Range Trade daily on DailyFX+, this trade may produce excess leverage in a yen trade should Thursday’s CHFJPY trigger at the same time; however our CHFJPY orders expire on Monday, and the additional risk would be acceptable.
[B]Event Risk Switzerland and Japan[/B]
[B]Canada[/B] – Canadian dollar event risk will pick up in the week ahead, with several previously market-moving events likely to force volatile moves across CAD pairs. The first piece of noteworthy data will come on the 17th, with traders likely to react to any strong surprises in the International Securities Transactions result. Yet the highlight of the calendar is scheduled for the very next day, with the Bank of Canada Core Consumer Price Index result due at 13:30 GMT on the 18th. Given market reactions to the recent BoC rate decision, any strong surprises in the inflation result could cause similar movements in the CAD. Event risk is capped by later monthly GDP figures and Retail Sales result. The former rarely forces volatility, but any surprises in Retail Sales could easily move the loonie.
[B]Japan[/B] – The Japanese economic calendar is ostensibly busy in the week ahead, but as we have discussed in the past, markets have shown few noteworthy reactions to JPY economic data. Of course, a December 20 Bank of Japan interest rate announcement could prove to be the exception to the rule. The bank is very widely expected to leave rates unchanged at 0.50 percent through the announcement, but any noteworthy shift in rhetoric could potentially spark JPY volatility. Yet it will be far more important to watch the performance of risky asset classes and its effects on all JPY pairs.
[B]Data for December 16 – December 23[/B]
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[B]Data for December 16 – December 23[/B]
[B]Date[/B]
[B]Canadian Economic Data[/B]
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[B]Date[/B]
[B]Japanese Economic Data[/B]
Dec 17
New Motor Vehicle Sales (OCT)
Dec 16
Tertiary Industry Index (OCT)
Dec 17
Int’l Securities Transactions (OCT)
Dec 17
Leading and Coincident Indices (OCT F)
Dec 18
Consumer Price Index (NOV)
Dec 18
All Industry Activity Index (OCT)
Dec 19
Wholesale Sales (NOV)
Dec 19
Merchandise Trade balance (NOV)
Dec 21
Gross Domestic Product (OCT)
Dec 20
BoJ Target Rate (DEC 20)
Dec 21
Retail Sales (OCT)
Dec 20
Convenience Store Sales (NOV)