Canada’s retail sales report is comin’ right up!
Can upbeat figures allow the uptrend on CAD/JPY to resume?
Before moving on, ICYMI, yesterday’s watchlist looked at AUD/JPY pulling back after Australia’s downbeat jobs release. Be sure to check out if it’s still a good play!
And now for the headlines that rocked the markets in the last trading sessions:
Fresh Market Headlines & Economic Data:
Fed official Logan supports another interest rate hike in June, says that data does not yet warrant pausing in the next meeting
Fed official Bullard also expressed support for another Fed hike, citing that the fall in Treasury yields counteracts banking sector tightening
U.S. Senate Majority Leader Schumer says that debt negotiations are moving forward while House Speaker McCarthy projects that a debt bill will be on the floor by next week
BOC Governor Macklem assures that it’s still too early to consider a rate cut but is using a conditional pause to assess whether they’ve done enough to keep a lid on inflation
New Zealand April trade balance showed a 427 million NZD surplus instead of the estimated 1.310 billion NZD deficit, as exports rose 10% while imports grew 12% year-over-year
Chinese state bank rumored to be intervening in the offshore yuan market to slow the currency’s decline
Japanese national core CPI improved from 3.1% to 3.4% year-over-year in April as expected
Japan’s tertiary industry activity index slumped 1.7% month-over-month versus estimated 0.3% uptick and earlier 1.7% increase
German producer prices rebounded by 0.3% month-over-month in April versus projected 0.5% decline and earlier 2.6% drop
Price Action News
Risk-taking dragged the safe-haven yen south against its forex peers for the most part of the U.S. session, before the Japanese currency managed to regain ground on upbeat Japanese inflation data.
Another round of positive updates regarding U.S. debt ceiling talks seem to have kept traders in the mood for riskier holdings earlier on.
However, the yen was unable to maintain much of a lead against the Kiwi, as market players already seem to be pricing in another RBNZ hike in next week’s meeting.
Upcoming Potential Catalysts on the Economic Calendar:
Canadian retail sales at 12:30 pm GMT
FOMC member Williams’ speech at 12:45 pm GMT
FOMC member Bowman’s speech at 1:00 pm GMT
Fed Chairperson Powell’s speech at 3:00 pm GMT
ECB head Lagarde’s speech at 7:00 pm GMT
Use our new Currency Heat Map to quickly see a visual overview of the forex market’s price action! 🔥 🗺️
Check out this forex pair cruising inside a short-term ascending channel!
CAD/JPY is currently hanging out at the channel bottom, and it looks like another bounce to the resistance levels is due.
The top of the channel is right around R1 (103.05) and a major psychological mark, so Loonie bulls might set their sights on this ceiling.
On the other hand, a break below the channel support could set off a move to S1 (102.14) and onto the next area of interest at S2 (101.58).
The upcoming Canadian retail sales release could make or break the trend, as this would give market participants more clues on what the BOC‘s next moves might be.
Analysts are estimating a steeper fall in consumer spending for March, which would likely shore up expectations for another pause and probably spur losses for the Loonie.
Just make sure you take the average CAD/JPY daily volatility of 102.5 pips into account when trading this one!
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