Buy CAD/JPY for target of 85.65 – Westpac

Analysts at Westpac are suggesting to long on CAD/JPY cross with the following parameters:
            “Entry: Buy 50% at 83.25, 50% at 82.75, Stop: 82.20*, Target: 85.65.”

Key Quotes

“Rationale: 

The cross has already made a strong move in the past ten days and is ripe for a short term flush so we look to position into (corrective) pullbacks

• Last week, BoJ underscored their 2% inflation goal and that they are only half way there with only marginal risk of altering when their economic projections are reviewed at their 20 July meeting
• Risk appetite is building again with little key event risk in G7 into month end
• BoC continues to shift from an easing bias based upon more positive assessments of the domestic economy
• This shift suggests an early withdrawal of their oil-related 50bp easing, yet the market is only pricing a partial 40bps unwind into Feb 2018 
• IMM position (net-levelraged) shorts (-72.4k now) have only been partially pared from their 4 year extreme of -81.3k contracts.”