Well technically, the daily chart of the CADJPY pair is a bit ugly. As you can see, the pair has just been ranging for the past several months. Presently though, it appears to have found support at the psychological 82.00 level. If this support holds, it can reach its previous high near 86.50, 90.00 or even near 95.00. But if it does not, the 80.00 marker should be able to carry it on its back. A break below 80.00 could be costly as the pair could slide all the way down to 70.00.
Fundamentally though, several economic indicators are pointing to a possible upmove for the pair. Tomorrow (July 20), the Bank of Canada (BOC) is expected to raise its interest rates to 0.75% from 0.50%. Such would make investments in Canada more attractive which would then lead to an increase in the demand for the Loonie, thus, likewise pushing its valuation upwards. A rate hike would also raise the interest differential between the CAD and the JPY. In case you don’t know, the JPY only have an interest rate of 0.10%, netting those who are long on the CADJPY with 0.65%.
Several other economic factors point to a short term rise in the valuation of the Canadian dollar. On Wednesday, Canada’s wholesale sales is projected to print an uptick of 0.3% after declining by the same pace during the previous month. Its retail sales figures, which will be posted the next day, are also predicted to have increased. Core retail sales are seen to have gained by 0.5% after dipping by 1.2% while the headline account is also predicted to have expanded by 0.5% after sliding by 2.0% the other month.
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