CADJPY has given up Monday’s vaccine-related gains after oil prices faded into the weekend. The week began strongly for the Canadian dollar after oil rallied from $37.00 to move above the $40.00 mark.
The move higher in the dollar was coupled with a weak Yen as safe-haven demand faded on the hopes for a vaccine by year-end. There were no big data releases for the pair after last week’s disappointing Canadian jobs number, which saw the unemployment rate rise to 8.9%.
Next week will see the release of the latest inflation figures from the Canadian and Japanese economies, but oil prices will likely be the key driver for the CADJPY. Crude has faded into the weekend as traders react to the rise in virus cases around the world and consider the logistical requirements for a large delivery of vaccines to avert lockdowns.
Joe Biden has said that he will lock the country down for 4-6 weeks as soon as he gets into office, while he is expected to push a green agenda so this is another headwind for the oil market. OPEC said this week that the virus would slow the oil recovery with demand set to rise by 6.3 million barrels per day (bpd) in 2021 to 96.26 million bpd. This was 300k bpd less than last month’s forecast. One positive for crude is that OPEC should delay their planned supply increase in January.
CADJPY Technical Outlook
CADJPY rallied hard on Monday to hit 81.00 but the pair has since corrected to 79.75. The next support is at 79.00 in CADJPY with the lower target at 78.00. The Investing Cube team is currently available to help all levels of traders with the Forex Trading Course or one-to-one coaching.