CAD/JPY Tumbles on US Treasury Debt Decision, Bounces Back to EMA
The Canadian dollar initially rose against the Japanese yen but then fell after news broke that the US Treasury would double its issuance of 30-year debt over the next month or so. This move caused a backlash against the carry trade, with the US dollar plummeting against the Japanese yen as investors unwound their positions.
However, later in the day, the Canadian dollar bounced back and is now trading around the 50-day EMA, leaving many questions about the motivations behind the Treasury's decision. Christopher Lewis, a technical analyst at DailyForex, notes that there is uncertainty surrounding whether the Treasury and Federal Reserve are aware of something that the rest of the world does not.
The 115-yen level seems to be a key resistance point for the CAD/JPY pair, and Lewis will be watching this closely. He believes that clearing this level would be a positive sign, given the interest rate differential between Canada and Japan remains wide.