Trade of the Day

CAD: Canada releases housing data next week (amid signs of a stabilization/rebound in activity and prices) but most attention will be on Friday’s Employment report for Sep. The Aug report reflected an outsized 81.1k gain in jobs. There are no BoC speakers scheduled for next week (since the spring, policy makers have generally kept a very low profile outside of the regular press conferences and speeches which follow policy decisions).

JPY: Japan wage growth slipped on lower bonus; household spending held up ahead of tax hike: Japan labour cash earnings, a key gauge of wage growth matched expectations to record a 0.2% YOY drop in August (Jul: -1.0% revised). Notably, wages fell more than initially estimated in the previous month as July’s decline was revised further down from -0.3% to -1.0% YOY. Nonetheless for August, the smaller drop was attributed to lower bonus payout as contracted earnings managed to edge up 0.3% YOY for the first time in many months. Meanwhile, household spending saw a modest increase of 1.0% YOY in August (Jul: +0.8%), marking its nine-month gaining streak ahead of this month’s sales tax hike. On a separate note yesterday, Japan leading index slipped further to 91.7 in August (Jul: 93.7) and the coincident index also dropped to 99.3 (Jul:99.7) to signal a less upbeat current and future conditions.

From a technical and trading perspective I am once again looking to play the CADJPY from the long side given the continuing development of a potential inverse head and shoulders pattern combined with the opportunity to trade the ‘C” leg of a AB=CD set up, yesterday key reversal has flipped the daily chart bullish and as such I will venture long through 80.85 targeting a test of the monthly R1 at 82.50.

Please note that this material is provided for informational purposes only and should not be considered as investment advice. The views discussed in the above article are those of our analysts and are not shared by Tickmill. Trading in the financial markets is very risky.

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