CAD
- The BoC left interest rates at 5.00% as expected but remains prepared to raise
rates further if needed. - BoC Governor Macklem delivered a
less hawkish speech in the press conference compared to his previous remarks. - The recent Canadian CPI missed
expectations across the board and the underlying inflation measures eased,
which was a welcome development for the BoC. - On the labour market side, the
latest report missed expectations across the board with negative figures in
full-time employment and a slowing wage growth, which is going to be another
positive outcome for the central bank. - The market doesn’t expect the BoC to
hike anymore.
JPY
- The BoJ kept its monetary policy basically
unchanged but formally widened the YCC to 1% on the 10-year JGBs stating that
it will be a reference cap. - Governor Ueda repeated once again
that they won’t hesitate to take easing measures if needed and that they are
not foreseeing sustainable price increases. - The recent Japanese CPIshowed that inflationary pressures remain high with
the core-core reading hovering at the cycle highs. - The Unemployment Rate remained
unchanged near cycle lows. - The Japanese Manufacturing PMI
matched the prior reading remaining in contraction with the Services PMI
falling but holding on in expansion. - The latest Japanese wage data beat
expectations. As a reminder the BoJ is focusing on wage growth to decide
whether to tweak its monetary policy. - The market expects the BoJ to keep
interest rates unchanged at the next meeting as well.
CADJPY Technical Analysis –
Daily Timeframe
On the daily chart, we can see that CADJPY
continues to range between the 107.53 support and the 110.00 resistance. The
price yesterday probed above the resistance following the miss in the US CPI
report which weakened the USD across the board and strengthened all the other
currencies. The big divergence with the MACD suggests that the pair might be
near the top as the central banks move to the sidelines waiting for the
economies to weaken further and the inflation rates to drop back to targets.
CADJPY Technical Analysis –
4 hour Timeframe
On the 4 hour chart, we can see that we have
another divergence with the MACD right at the resistance which is generally a
sign of weakening momentum often followed by pullbacks or reversals. In this
case, we got the pullback into the trendline where the sellers are likely to
step in with a defined risk below the trendline to position for a rally into
the cycle highs.
CADJPY Technical Analysis –
1 hour Timeframe
On the 1 hour chart, we can see more
closely the bullish setup with the support around the trendline and the 61.8%
Fibonacci retracement level. The sellers, on the other hand, will want to see
the price breaking below the trendline to invalidate the bullish setup and
position for a drop into the 107.53 support.
Upcoming Events
Today, we have the US
Retail Sales and PPI data with the market likely giving more importance to the
Retail Sales data. Tomorrow, we will see the latest US Jobless Claims figures
where the market will want to see how fast the labour market is softening.
This article was written by FL Contributors at www.forexlive.com. Source