Everyone and their momma are expecting Bank of Canada (BOC) to raise interest rates today.
How will the decision affect CAD/JPY’s consolidation?
Before moving on, ICYMI, yesterday’s watchlist explored EUR/USD’s Fib trade opportunity after Germany posted a strong factory orders data. 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:
JPMorgan Chase CEO Jamie Dimon says inflation eroding consumer wealth may cause recession next year
AIG PMI: Australia’s services sector shrunk from 47.7 to 45.6 in November on weakening demandAustralia’s GDP grew 0.6% in September quarter and 5.9% annually as economy recovered from Covid lockdowns
China’s exports (-8.7% y/y) and imports (-10.6% y/y) shrank at their steepest pace in at least 2.5 years
China: asymptomatic COVID-19 cases and people with mild symptoms can now quarantine at home
Swiss jobless rate rose from 1.9% to 2.0% as expected in November
Germany industrial production declined by 0.1% in Oct (vs. 1.1% in Sept) as high energy prices take toll
Halifax: UK house prices fall 2.3% from October to November, the fastest rate in 14 years
Hungarian government scraps price cap on fuels as shortage worsens
Oil steady as China revival hopes offset Russia uncertainty
Upcoming Potential Catalysts on the Forex Economic Calendar:
Eurozone’s revised GDP at 10:00 am GMT
BOC’s policy statement at 3:00 pm GMT
US crude oil inventories at 3:30 pm GMT
Japan’s current account balance at 11:50 pm GMT
UK RICS house price balance at 12:01 am GMT (Dec 8)
AU trade balance at 12:30 am GMT (Dec 8)
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 has been in a downtrend since getting rejected at the big 110.00 mark in late October/early November.
In fact, the pair broke below a 100(ish)-pip range in late November and is now consolidating in a symmetrical triangle closer to the 100.00 – 101.00 zone.Can CAD/JPY bears pull another downside breakout?
Let’s see if Bank of Canada’s (BOC) policy decisions can move prices today.
Unlike in RBA’s decision earlier this week, market geeks aren’t as confident in their forecasts. Some predict that BOC will slow down to “only” a 25 basis point hike while others believe that Gov. Tiff Macklem and his team will raise rates by 50 bps for a second consecutive time.
A 50 bps rate hike could send CAD/JPY above its triangle consolidation. The pair could hit 102.00 or even 103.00 depending on how hawkish BOC members are in the foreseeable future.
On the other hand, a 25 bps rate hike or talks of slowing down the pace of rate hikes could keep CAD/JPY in consolidation mode if not cause a downside breakout.
Look out for a break of the 100.00 support for signs that CAD/JPY would extend its weeks-long downtrend!