- You can see that the Canadian dollar plunged during the trading session on Friday against the Japanese yen, which makes sense as the jobs number out of Canada was ridiculous.
- The Canadians only added 1,100 jobs last month, all of which were part-time.
- We've seen some Canadian dollar weakness, and you have to keep in mind that the tariff situation between the United States and Canada is still a very real and a very live thing.
Because of this, I think the Canadian dollar remains on its back foot regardless. Pair that with the Japanese yen, which is a currency that has been strengthening for a while and of course features a central bank that looks like it might very well start to tighten monetary policy going forward.
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Rallies to Continue to See Troubles
If that is in fact going to be the way we go from here, then it lends itself to suggesting that rallies at this point in time should probably be shorted in this pair. Now, having said that we have bounced from the 102 yen level, which of course is a good sign, but it was a major crash low back in August of 2024. So, a little bit of market memory probably came back into play at that point.
The 105 yen level above is a significant area of resistance. And so is the 106 yen level. Ultimately, I think you see a lot of noisy behavior, but if we rally a bit and show signs of exhaustion, then traders are going to continue to jump in and pile on this pair. It's not really a matter of the Japanese yen being so strong, which it happens to be, but this is more of an anti-Canadian dollar trade. The action that we have seen for some time now should continue to be the way forward.
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