Strategy Trade Update: Foreign Exchange - Global

Research evidence excerpt

Strategy Trade Update: Foreign Exchange - Global

Nomura | Strategy Trade Update 24 June 2026

On the other factors, the US-Iran war is now largely in the rear-view mirror for markets,

suggesting a limited impact on USD/CAD from here. Meanwhile, there have been few

obviously negative headlines from trade negotiations, which could still flare up.

One growing risk to this trade is that very strong USD momentum of recent weeks

is pushing positioning to more stretched levels. We are not quite at the extremes seen

during recent USD peaks, and the shift in positioning has been more acute in some

segments (asset managers, for example) than others (Fig.2). We also see some

downside risks to US data in the weeks ahead relative to elevated expectations.

Short CAD/JPY

With some of these risks becoming more apparent, but still wanting to have some CAD

downside exposure, we also open a short CAD/JPY trade, as a tactical hedge to risks

we see both in FX policy, positioning and from external factors.

Upside in USD/JPY has been somewhat capped in recent sessions, with market

participants remaining nervous that MOF intervention could be imminent and with reports

that therehavebeengreaterdiscussionsbetweentheUSTreasuryandJapan’sfinancial

officials (source: NHK). Should the MOF intervene in the coming weeks, we would

expect it to have a meaningful impact on CAD/JPY (Fig.3). In previous intervention

episodes, CAD/JPY fell anywhere between 1% and 3.5% on the day of intervention

activity. As such, we see good tactical risk-reward for entering this trade with FX

intervention risk seemingly elevated right now.

The ongoing fall in oil prices should also translate to CAD/JPY weakness. Although

oil is no longer a primary driver of G10 FX movements, at the margin, ongoing progress