Canada is releasing its monthly GDP report today!
Can this spur a breakout from CAD/JPY’s range?
Before moving on, ICYMI, yesterday’s watchlist looked at a potential range breakout on EUR/JPY. Be sure to check out if it’s still a valid play!
And now for the headlines that rocked the markets in the last trading sessions:
Fresh Market Headlines & Economic Data:
BOE announced intervention to stabilize gilts market
BOE shared plans for bond-buying operations for latter half of Oct
US preliminary wholesale inventories rose 1.3% vs. projected 0.4% uptickUS pending home sales sank 2.0% vs. estimated 0.9% drop
EIA crude oil inventories showed 0.2M decline vs. projected 2.0M gain
New Zealand ANZ business confidence index improved from -47.8 to -36.7
Australian CPI dipped from 7.0% to 6.8% y/y in August
ECB official Muller: Too early to say how much they’ll hike in Oct
ECB official Simkus: My choice would be a 0.75% rate hike
U.K. Treasury Secretary Philip: BOE intervention had the desired effect
Upcoming Potential Catalysts on the Forex Economic Calendar:
SNB Governing Board member Maechler’s speech at 11:45 am GMT
Canadian monthly GDP at 12:30 pm GMT
US final GDP reading at 12:30 pm GMT
RBNZ Governor Orr’s testimony at 1:00 pm GMT
FOMC member Bullard’s speech at 1:30 pm GMT
FOMC member Mester’s speech at 5:00 pm GMT
Japanese preliminary industrial production and retail sales at 11:50 pm GMT
Chinese official manufacturing and non-manufacturing PMIs at 1:30 am GMT (Sept. 30)
Use our new Currency Heat Map to quickly see a visual overview of the forex market’s price action! 🔥 🗺️
What to Watch: CAD/JPY
CAD/JPY 1-hour Forex Chart
This pair has been moving sideways for quite some time, as Loonie traders are probably waiting for more catalysts.
Are we about to see a breakout today?
The upcoming Canadian GDP release might be enough to stoke volatility for CAD/JPY, as number crunchers are expecting to see a 0.1% contraction.A sharper than expected drop in economic activity might bring some bearish vibes for the Loonie, likely allowing the pair to resume its downtrend.
Add that to the backdrop of risk-off flows stemming from recession jitters!
Even a pop higher from the range might encounter upside barriers at the 50% Fib and short-term descending trend line.
Technical indicators are pointing to a continuation of the selloff, as the 100 SMA is below the 200 SMA to reflect bearish momentum. Stochastic is also moving south, so the pair could follow suit while sellers have the upper hand.
Other catalysts to watch out for include a possible rally in crude oil prices, especially since the EIA just printed a surprise reduction in inventories. Worsening geopolitical tensions from Russia might also revive fears of an energy crunch, which might drive oil and the correlated CAD higher.
