Forex Market: CAD/JPY daily forecast

During yesterday’s trading session CAD/JPY traded within the range of 92.38-92.95 and closed at 92.72.

At 09:12 GMT today CAD/JPY was gaining 0.3% for the day to trade at 93.10. The pair touched a daily high at 93.19 at 06:10 GMT, breaching the first resistance level of 92.99.

Fundamental view

The Bank of Canada will probably keep its benchmark interest rate intact at 1.0% for a 29th consecutive time. The Bank of Canada holds its monetary policy in order to set the short-term interest rates. This is accomplished by changing the so-called “overnight” rate. This is the interest rate that major financial institutions pay as interest in the exchange of money between them overnight. Changes in the overnight rate influence other interest rates, such as interest rates on consumer loans, as well as those tied to mortgages. The purpose of the Canadian monetary policy is to maintain the level of inflation as measured by CPI on an annual basis and for this purpose the central bank works closely with the government. Since 1995 the target range is set between 1 and 3 percent. In November 2000, the bank introduced a system of eight fixed dates during the year, to discuss possible changes in interest rates. Decisions are taken by consensus. The Governing Council meeting usually starts on Friday, with the development of general economic analysis and future model of economic development, as well as identifying the trend and inflation. By the end of the day the bank announces its decision on the base rate and holds a press conference on the decision.

At 14:00 GMT, the Bank of Canada will announce its interest rate decision. In case the central bank preserves the main interest rate or in case the bank raises it, this will certainly heighten the loonie’s appeal.

Technical view

According to Binary Tribune’s daily analysis, in case CAD/JPY manages to breach the first resistance level at 92.99, it will probably continue up to test 93.26. In case the second key resistance is broken, the pair will probably attempt to advance to 93.56.

If CAD/JPY manages to breach the first key support at 92.42, it will probably continue to slide and test 92.11. With this second key support broken, the movement to the downside will probably continue to 91.85.