Canadian Dollar Finds Bid on Yield Outlook

Strong Canadian fundamentals have brightened the outlook for a BoC rate hike despite the cautious tone from policy makers following their last meeting. A failed test of a rising trend line led me to close the reminder of my short CAD/JPY after I already took half profits after my initial target the 50-Day SMA was hit. At This point I will look for another failed test of the 200-Day SMA at 83.89 to get short again or a break below trend lien support. Above the topside barrier could change my bias as markets continue to price in several rate hikes from the central bank which may remain supportive. However, oil prices are the main driver and if the global outlook continues to dim on the prospect of Chinese tightening, then we could see loonie weakness return.