CAD/JPY pulling back towards 82.00 after dovish BoC Poloz speech

• Poloz says: Canada may be able to have more growth without higher inflation”.
• CAD/JPY plunges 200 pips from the high of the day. 

The CAD/JPY is trading lower at around 82.41 down 0.55% so far as Poloz gave his speech on the labor market and monetary policy. 

The Bank of Canada Governor Stephen Poloz in his speech today said that “the monetary policy will remain particularly data-dependant”. He also said that the interest rates are “likely to move higher”, nothing new for the market here. However, more dovish comments such as: “Canada may be able to have more growth without higher inflation” made the Canadian Dollar weakened across the board. 

Accentuating the CAD/JPY weakness is the relative Yen strength. Monday saw a political scandal in Japan, which triggered a flight to safety. Also, earlier on Tuesday, President Trump fired Rex Tillerson the Secretary of State, which also created demand for Yen, but to a lesser extent.  

Coming up next are the meeting’s minutes from the Bank of Japan scheduled at 23.50 GMT on Tuesday. 

CAD/JPY 4-hour chart

The CAD/JPY sold off after testing the 200-period SMA dynamic resistance close to 83.50. The market is now testing the 82.50 psychological level. Support is seen at the 82.00 figure and at the cyclical low just before 81.50. Resistance becomes then 83.50 which is Tuesday's high, followed by the 84.00 figure.