Should We Be Wary of Further Downside Potential for the Canadian Dollar/Yen Pair Following the BOC’s 0.25% Rate Cut?

Should We Be Wary of Further Downside Potential for the Canadian Dollar/Yen Pair Following the BOC’s 0.25% Rate Cut?

05.09.2024

In the U.S. currency market yesterday, the Canadian dollar fell against the yen following the Bank of Canada’s (BOC) policy rate announcement, in which the central bank cut the policy rate by 0.25% to 4.25%, as expected by the market. The CAD/JPY pair fell by approximately 150 pips from 107.523 to 106.002.The downtrend along the 10-period moving average (MA) on the hourly chart continued. On the daily chart, the price has fallen from the +2σ to the -2σ levels of the Bollinger Bands, so we should remain cautious of a continued decline.

European currencies rose, with the euro gaining against the U.S. dollar after the European Union’s July Producer Price Index (PPI), released yesterday, improved year-over-year from the previous month’s -3.2% to -2.1%.The EUR/USD pair rose from 1.1034 to 1.1095. A rebound along the 20-period moving average (MA) on the hourly chart was confirmed. On the daily chart, this marks a critical point to see if the rebound will continue at the 20-MA support line, so we will be watching price movements closely during European trading hours.

Today’s schedule includes South Korea’s real GDP at 8:00, Japan’s Monthly Labor Survey at 8:30, Japan’s foreign and domestic securities investment at 8:50, the Philippines’ Consumer Price Index at 10:00, Australia’strade balance, at 12:30 Thailand’s Consumer Price Index, at 14:00 Singapore’s retail sales, at 14:45 Switzerland’s employment statistics, at 15:00 Germany’s manufacturing orders, at 18:00 the Eurozone’s retail sales,U.S. Challenger Layoffs at 20:30, U.S. ADP Employment Report at 21:15, Canada Labor Productivity at 21:30,21:30 U.S. Initial Jobless Claims, 22:45 U.S. PMI (Purchasing Managers’ Index), and 23:00 U.S. ISM Non-Manufacturing Index are scheduled. We should remain highly vigilant regarding the downside potential for the CAD/JPY pair, which fell following the BOC’s 0.25% rate cut.