Intraday Market Thoughts

Archived IMT (2010.11.01)

by Ashraf Laidi
Nov 1, 2010 1:51

FOLLOW-UP on CADJPY PLAY from my earlier tweets Sunday evening, favouring the pair to regain 79.90s from current 79.20. A break above 80 eyes 80.90trend line extending from April high. Favourable CADJPY rationale based on combination of Japan intervention rumblings, Fridays 0.3% rise in CAD Aug GDP following 0.1% drop in July and the latest rise in Chinas October PMI, which jumped to 54.7 from Septembers 53.8. Yen pairs rose across the board, triggering intervention speculation but the overall move in USDJPY was less than 100 pips which is smaller than the average high-low move typical of intervention. This does not meant the BoJ did not step in. I reiterate that Japan could well defend the 80 yen figure as threat of volatility escalates this week from i) US elections. Ii) Fed decision on QE2 iii) US Oct jobs report. The fact that the Cino-Japan relations have taken another turn to the worse regarding the 2 disputed islets is another reason Japan could slow the extent of the rising yen as China loads up on JGBs. And considering a JAPAN MARKET HOLIDAY ON WEDNESDAY, this means the post-US election reaction will hit a Japanese vaccum, which could draw the BoJ to trigger interventionist measures.


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