With a light economic calendar, main focus will be on BoC monetary policy decision today. No change is expected as the central has just stopped asset purchases back in October. Also, at that statement, BoC had pushed forward the timing for the first rate hike to “sometime in the middle quarters of 2022”, compared with previous estimate of “the second half of 2022”. Given the uncertainty surrounding Omicron, the central bank will more likely keep the rhetoric unchanged than not.
Some previews on BoC:
- BOC Preview – Reiterating Rate Hike in First Half 2022 amidst Strong Economic Data
- Bank of Canada Meeting Preview: BOC Inching Closer to Rate Hikes
- Bank of Canada Meets as Omicron Hits Loonie
- Forward Guidance: Bank of Canada and Omicron Risks in the Spotlight Next Week
Canadian Dollar is in strong rebound this week, partly on return of risk-on sentiment, in tandem with rebound in oil prices. CAD/JPY’s pull back from 93.00 could have completed at 87.68, after hitting 61.8% retracement of 84.65 to 93.00 at 87.83.
Sustained trading above 55 day EMA (now at 89.78) will affirm this case and pave the way for retesting 93.00 high next. Also, given that CAD/JPY has defended medium term trend line support and 55 week EMA very well, the whole up trend from 73.80 could be ready to resume through 93.00 in this case.
Nevertheless, another fall and sustained trading below 87.83 will turn focus back to 84.65 key medium term structural support.
