. CAD/JPY Forex Pair: Global Growth Indicator - 28 March 2023

CAD/JPY Forex Pair: Global Growth Indicator – 28 March 2023

CAD/JPY Forex Pair: Global Growth Indicator – 28 March 2023

cadjpy forex pair
  • The US dollar remained stable against major currencies on Thursday, following the Federal Reserve’s indication of its confidence in the US economy’s growth and inflation, reinforcing expectations of several rate hikes in 2018.
  • Traders are now anticipating upcoming US data, including non-farm payrolls, to provide a boost to the weakening dollar. While the Fed’s decision to keep interest rates unchanged was widely expected, its slightly hawkish stance boosted expectations of increased borrowing costs under the new central bank chief, Jerome Powell.
  • The dollar index against six major currencies held steady at 89.127, having recovered slightly from last week’s three-year low. The dollar edged up 0.2% against the yen to 109.36, while demand for cross/yen pairs, such as the Canadian dollar against the yen, helped underpin the US dollar.
  • The CAD/JPY forex pair is seen as an indicator of global growth and is currently on the verge of breaking through an important level after a five-day run of gains. The pair had previously spiked in May and June before retracing to 102, but it is now just a few pips away from hitting its previous high.
  • The Bank of Japan’s decision on policy and guidance could influence whether the pair breaks out. Despite rising global growth risks, the Bank of Canada recently hiked rates to 2.50%, with Canadian 2-year notes at 3.30%, providing a large spread over Japanese twos at -0.07%. Additionally, higher energy prices could further boost Canada’s trade surplus and hinder Japanese trade.
  • Overall, the short-term prospects of the CAD/JPY pair depend on market sentiment, which has seen an upturn with recent rallies in the S&P 500 and cryptocurrencies.

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