A lack of fresh catalysts kept the major currencies contained in tight ranges during the Asian session.
The BOC is up in a few hours, though. Think the event will spice things up for the Loonie?
Before we talk about today’s setup, you should check out the headlines that inspired today’s Asian session moves:
- AstraZeneca pauses coronavirus vaccine trial after unexplained illness in volunteer
- U.S. Senate aims for Thursday vote on scaled-down coronavirus aid bill
- AU’s Westpac: consumer sentiment roars back despite news of recession
- ANZ: NZ activity indicators are at their highest levels since February, but are still well down compared to pre-COVID days
- China’s consumer inflation eases to 2.4% in August
- China factory prices fall at slowest rate in five months as recovery continues
- Oil falls further amid growing alarm over coronavirus second wave
Upcoming Potential Catalysts on the Economic Calendar:
- Switzerland’s unemployment rate at 5:45 am GMT
- Japan’s preliminary machine tool orders at 6:00 am GMT
- Canada’s housing starts at 12:15 pm GMT
- BOC’s policy announcement at 2:00 pm GMT
What to Watch: CAD/JPY
Unless you were too busy watching your NBA games and a Djokovic-less U.S. Open, then you’ll know that global growth fears, the end of summer driving season in the U.S., and a bit of profit-taking have weighed on crude oil prices and the oil-related Loonie.
CAD/JPY has fallen by at least 100 pips in less than 24 hours and is now chillin’ like ice cream fillin’ at the 80.00 major psychological handle.Will the bulls step in at 80.00? Japan won’t be printing top-tier releases, so CAD/JPY’s next moves will likely come from reactions to the BOC’s statement and overall market risk sentiment.
Analysts aren’t expecting policy changes from the BOC but they will keep tabs on whether Governor Tiff Macklem and his team remain dovish on the economy.
If BOC members continue to hint that the economy is in for a “long climb,” or if risk aversion continues to send traders to safe havens like the dollar and yen, then CAD/JPY could break below 80.00 and revisit previous areas of interest around the 79.50 zone.
But if the BOC gang hint at a faster-than-expected recovery, or if risk-takers get back in the game today, then CAD/JPY could jump back up to retest Fib retracement levels below the broken trend line.