HomeLive CommentsCAD/JPY pressing 55 day EMA support as BoC awaited

CAD/JPY pressing 55 day EMA support as BoC awaited

BoC meeting is a major focus today and it will undoubtedly keep monetary unchanged. The overnight rate target will be held at effective lower bound of 0.25%. Large-scale asset purchase will continue at CAD 5B per week pace. Governor Tiff Macklem should reiterate the pledge to ” hold the policy interest rate at the effective lower bound until economic slack is absorbed so that the 2 percent inflation target is sustainably achieved.”

GDP data for May (4.8% mom) and June (6.5) suggest that slightly stronger than expected recovery is underway. Yet, the path ahead remains largely uncertain, depending on the coronavirus, vaccines and treatments. Hence, while Macklem might acknowledge the pleasant surprises of the economic data, the overall tone would remain cautious. Topics like yield curve control and Fed’s style average inflation targeting might be discussed. But there is no pressing need for any change as of now.

Canadian Dollar is currently the second worst performing one next to Sterling, as dragged down by the steep fall in oil prices. CAD/JPY is now pressing key near term support at 79.88, as well as 55 day EMA. Sustained break there will confirm the completion of rise from 77.61 to 81.58. We should at least see a deeper decline back to 81.58 support for the near term in that case.

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