TD Research discusses CAD/JPY outlook and continues to like the tactical downside targeting a move towards 84.00.
"The chart summarizes essential signals from our dashboard relating to positioning and valuation. For starters, the cross is 7% overvalued on our Global Macro PCA framework. That fits near the most extreme levels priced into this cross seen over the past decade. Positioning is also extreme, trading at roughly 2- sigmas overbought," TD notes.
"While the macro story, related to the BoC, remains upbeat, what matters is how much the market has already priced that in. We showed a few times how CAD trades on rates and mobility, which also implies too much good news," TD adds.