Canada is printing its inflation rate today.
Will the report put more pressure on the Bank of Canada (BOC) to raise its rates sooner than later?
Before moving on, ICYMI, today’s Asia-London session watchlist checked out GBP/USD’s consolidation ahead of the U.K.’s inflation reports. Be sure to check out if it’s still a valid play!
And now for the headlines that rocked the markets in the last trading sessions:
Fresh Market Headlines & Economic Data:
NZ producer input price increases ease from 3.0% to 1.6%, output price increases down from 2.6% to 1.8% in Q3 2021
AU MI leading index improves from -0.02% to 0.16% in October
AU Q3 wage price index hits pre-pandemic rates but still short of RBA rate hike-inducing levels
Japan’s exports snapped seven months of double-digit growth in October due to slowing car shipments
Japan September core machinery orders flat from previous month
Dollar soars on upbeat U.S. data but Asian stocks wobble COVID-19, inflation concerns
UK inflation soars to 10-year high of 4.2%, making December interest rate rise ‘more likely’
Upcoming Potential Catalysts on the Economic Calendar:
ECB’s finacial stability review due today
Canada’s inflation reports at 1:30 pm GMT
U.S. building permits at 1:30 pm GMT
U.S. housing starts at 1:30 pm GMT
If you’re not familiar with the forex market’s main trading sessions, check out our Forex Market Hours tool.
What to Watch: CAD/JPY
In a few hours, Canada will print its October consumer price index (CPI) data.
Markets see a 0.7% increase or a 4.4% – 4.6% annualized uptick but faster-than-expected price increases could push the Bank of Canada (BOC) to move forward its rate hike schedule.
I’m looking at CAD/JPY as it sits near the 91.50 support-turned-resistance level while the 100 SMA approaches the 200 SMA.
Unless we see massive profit-taking on USD/JPY that would drag on the rest of the yen crosses, a strong inflation reading would bust CAD/JPY out of its range on the 1-hour chart. CAD/JPY’s daily average volatility suggests that the pair could still reach the 92.00 – 92.25 area today.
Oh, and take note that a bunch of FOMC officials will give speeches today. If they support a 2022 Fed rate hike, then USD/JPY could get fresh bullish momentum and bump CAD/JPY other yen crosses higher.
Meanwhile, a weak Canadian CPI reading or a session of JPY strength would support the bearish divergence pattern on the chart. CAD/JPY could dip to the 91.00 psychological handle and mid-range levels.
