Fundamentals

With Canadian employment on the docket tomorrow, the CAD/JPY pair will be the focus of the currency market as traders try o determine if it is ready to stage a recovery rally. The pair has been battered by fears that growth in North America may be starting to stall which could force the Fed to abandon its taper of QE. For Canada the situation has been further aggravated by slowdown in demand for the countries commodities and the overall underperformance against its neighbor down south. However, the recent news that the Keystone pipeline project – a key factor to cost effectively transport the country oil reserves – may get a green light, has infused investors with a measures of relief that growth could begin to improve. If tomorrow’s employment data shows a rebound from last month’s horrid -47K print then the Canadian dollar should strengthen. And if US NFPs also print in line, the one two combination of positive labor data form the North American continent should boost CAD/JPY past the 93.00 level.

Technicals

CAD/JPY has made a rounded bottom at the 91.00 level and now has clearance all the way to 93.00.A break there opens a run all the way to 95.00 while a retest of the bottom could trigger a move to 90.00