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CAD/JPY – Targeting 96.00?
The 300 point drop in the Dow today flipped the flows in the Canadian dollar pushing it lower from the overnight trade as risk aversion kicked in. Tomorrow however, the market will have much more important data point to consider as trader focus on Canadian employment data. The market is looking for a bump in the number to 18.7K from a decline of -11.0K the month prior. A strong number could turn the loonie around, but if the data misses for the second month in row the pair could come under heavy selling pressure as the news on the employment front could force the BOC to consider new accommodation policies in the face of slowing economy and lower oil prices. In the meantime the yen crosses remain under pressure as risk assets continue to decline. That could set up for tough combination of selling factors and push the CAD/JPY pair towards 96.00
Technically the 96.00 level in CAD/JPY is a key support level and a break there opens a run towards 94.00. A turn higher however would alleviate the selling pressure and a break above 97.50 would put the stance back to neutral,