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.

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