BoC is widely expected to keep monetary policy unchanged today. Overnight rate will be held at 0.25%. Asset purchase was already tapered from CAD 4B per week to CAD 3B, and thus no change is expected for now. While employment and GDP grow data were disappointing, there were upbeat developments from stronger oil prices and vaccination. All in all, BoC would likely maintain the upbeat tone.
Some previews on BoC:
- BOC Preview – Policymakers to Keep Upbeat Tone Despite Softening Growth
- Bank Of Canada Preview: To Taper Or Not To Taper
- Bank of Canada to Stay on Tapering Path But No New Action This Week
CAD/JPY has been clearly losing upside momentum as seen in daily MACD. It’s also in proximity to 91.62 long term resistance. Hence, upside potential could be limited even though another rise cannot be ruled out yet. On the other hand, break of 89.55 support will be a strong sign of medium term topping. In this case, deeper fall would likely be seen through 55 day EMA to 85.40/88.06 support zone, as a correction to rise from 77.91. It’s a bit early to tell, but that could also be a correction to the whole up trend from 73.80 low, as a five-wave sequence is then completed.
