European Open CADJPY Holds Firm ahead of Canada’s CPI Report – | Jewelry Dukan

Asian indices:

  • Australia’s ASX 200 Index is up 79.7 points (1.19%) and is currently trading at 6,799.60
  • Japan’s Nikkei 225 Index is down 110.84 points (-0.4%) and is currently trading at 27,678.49
  • Hong Kong’s Hang Seng index is up 251.22 points (1.35%) and is currently trading at 18,817.19
  • China’s A50 index is up 25.65 points (0.2%) and is currently trading at 13,151.32

UK and Europe:

  • UK FTSE 100 futures are currently up 43.5 points (0.6%), the spot market is currently valued at 7,280.18
  • Euro STOXX 50 futures are currently up 12 points (0.34%), the spot market is currently valued at 3,511.49
  • Germany’s DAX futures are currently up 66 points (0.51%), the spot market is currently valued at 12,869.24

US futures:

  • DJI futures are currently up 62 points (0.2%).
  • S&P 500 futures are currently up 31.25 points (0.26%).
  • Nasdaq 100 futures are currently up 8.75 points (0.22%).

Stock markets were mostly higher overnight, with the Hang Seng taking the lead after reports reported Hong Kong leaders had agreed on a way to begin lifting all quarantine measures (but only after “proper preparation”) .

Sweden is expected to follow the ECB’s 75 basis point hike today, with rates rising to 1.5% from 0.75%. And that would be their highest rate since July 2012 if they do. And economists also support the SNB also hiking 75 basis points to 0.5% on Thursday.

Japan’s inflation hit near an eight-year high, staying above the BOJ’s 2% target for the fifth straight month. However, the BOJ is unlikely to see its ultra-dovish policy later this week, although the longer inflation trends stay higher above its target, the greater the pressure on them to act.

Canada’s inflation report is in focus at 13:30 BST


Further signs of disinflation are forecast for some of the headlines. The CPI is expected to slip to 7.3%y/y from 7.6% – which would be the lowest year-to-date since April. Inflation is also expected to contract by -0.1% m/m – which would be the first negative reading in eight months and the third consecutive lower reading. In addition to the drop in producer prices, this is indeed a positive sign. Note, however, that the BOC pays more attention to the combined, mean, and trimmed CPIs — which move slower than the underlying headlines. However, if headline inflation moves lower, it’s only a matter of time before their preferred actions follow suit.

The joint and median CPI are expected to remain stable at 5.5% y/y and 5.0% y/y respectively and the trimmed mean is expected to increase to 5.5%. And that should keep the average of these trees at a record high.

CAD/JPY 4 hour chart:


CAD/JPY has been in a retracement phase since the 110.59 high, although it is faltering around a support cluster between 107.50 – 108 (July high, 38.2% Fibonacci level, R1 monthly pivot point). advised. Without the support zone, we would focus on the bearish trend (and this could still present a bearish opportunity on the 1-hour timeframe or below). But on this time frame we would like a break below 107.45 before expecting a continuation of the trend.

But if momentum picks up then bias remains bullish above 107.45 and for an initial move to 109.17. But risk appetite is also a factor here, so a weak inflation report combined with weaker equity markets could send this market lower.

Economic events next (times in BST)

  • German producer prices are likely to have risen by 1.6% in August after 5.3% in July. However, at over 37% annual rate, it’s hard to cheer until we see a sustained bout of deflation on the monthly prints. And that probably won’t happen until we see stability in the natural gas and power markets.
  • US housing data is expected to show building permits and housing starts falling further as higher interest rates ease further.
  • And central bankers are at the forefront, with the ECB’s McCaul speaking at 4:145pm, Lagarde at 6pm and a BOC Deputy Governor at 8:45pm.


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