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Analysts at Westpac are recommending to buy the CAD/JPY cross at around 85.10 levels for the target price of 87.00, while maintaining a stop loss of 84.55.

Key Quotes

“CAD/JPY has been under the radar lately but the likely signing of the revised USMCA trade deal this weekend and the Bank of Canada meeting next week could deliver some upside progress for the cross.”

“The BoC meets 5 Dec while Gov. Poloz is scheduled to deliver a speech the following day. The Bank will surely acknowledge risks from the recent energy price slump but that is priced in and in any case the Bank can point to other areas of strength. That should leave recent more hawkish signalling that the Bank wants to return to neutral intact and reinforce Jan 2019 hike expectations.”

“Officials have signalled that there will be a signing ceremony for the revamped USMCA trade deal at the Buenos Aires G20 this weekend. The deal is likely to be signed by negotiators (i.e. Lighthizer) rather than Heads of State and there is still a long arduous process of fine-tuning ahead. However, the ceremony will add to the impression of forward progress.”

“OPEC is scheduled to meet 6 Dec. As G20 passes the focus may shift towards the potential for an agreement to reduce oil production by 1mn barrels per day, something that is starting to be discussed in the oil market.”