The Bank of Canada rate hiking has been supportive for CAD/JPY to continue to move to upward in medium-term. The previous width of medium-term exchange rate target zone was managed for 16 % (75.50/88.50) and wider than monetarists’ consensus for 15 %. The pair pressured down for 9.50 % (80.50) and resumed back to upward.
The current upper medium-term band already broken for 0.50 % (89.00) from the previous 88.50) and to confirm the CAD/JPY to align to upward by breaking her upper medium-term band.
Based on the measured previous band 16 % and the new lower medium-term band at 80.50, then the CAD/JPY will visit the level of 93.50 for 16 % width of new medium-term exchange rate target zone.
JPY investor will be in rush to invest into CAD and CAD-denominated debt securities to look for the anticipated yield plus the yield from the CAD-denominated debt securities in medium-term.