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 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 at the last meeting 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 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 sold off from the 110.50 resistance all the way back to the 107.50 support where it bounced as the buyers piled in with a tight risk below the level to position for a rally back into the resistance and target a breakout. As of now, this remains a rangebound market where the market participants can only buy at support and sell at resistance.
CADJPY Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that we have a minor resistance where the sellers can lean onto to position for another drop into the support and target a breakout. In fact, we can see that we have the confluence with a previous swing low level, the 38.2% Fibonacci retracement level and the red 21 moving average. The buyers, on the other hand, will want to see the price breaking higher with conviction to invalidate the bearish setup and increase the bullish bets into the resistance.
CADJPY Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that the price recently diverged with the MACD right into the support. This is generally a sign of weakening momentum often followed by pullbacks or reversals. In this case, we got a reversal, and the price is now testing the resistance around the 108.60 level. If we get a little pullback from this resistance, the buyers should lean on the minor upward trendline to position for a continuation of the rally above the resistance. The sellers, on the other hand, will want to see the price breaking below the trendline to increase the bearish bets into the support.
Upcoming Events
Today we will get the latest US Jobless Claims report which is probably going to be the most important release of the week. Tomorrow, the US will be on holiday for Thanksgiving Day and therefore the liquidity in the market will be thinner. On Friday, we conclude the week with the Japanese CPI data, the Canadian Retail Sales and the US PMIs. Weak US data should support the JPY as global yields are likely to fall further, while strong data is likely to weigh on the Yen in the short term.
