Expectations of the trade conflict's end unexpectedly rose this week. However, the deals to SELL still seem the most effective.

The rates continue within a weak downtrend, but since the beginning of this year there have been signs of a new trend. After a long period of decrease in oil prices and the negative impact of the trade conflict between the US and China, the situation began to change this year. Commodity currencies received support with the resumption of negotiations to resolve the trade conflict between the US and China. Moreover, the probability of successful results from these negotiations and the achievement of a compromise solution gradually increases.

In addition to the common trends on the market, the Canadian dollar received support from the growth of oil prices and relatively good macroeconomic reports. In particular, the PMI business activity index rose to 59.7 pips in December, while the market predicted a decline in the index to 56.8 pips. The situation in the real estate market has suddenly improved, where the number of construction permits issued has increased by 2.6%, far exceeding expectations on the market. The Central Bank of Canada has kept the current interest rate at the same level. At the same time, the probability of an increase the interest rate twice during this year remains high, given the stabilization in oil prices corresponding to the target levels of inflation, as well as the lowest over the past 40 years unemployment rate. The only negative factor in the Canadian economy is the growth of the trade balance deficit, which in December increased more than twice compared to the previous period. However, it could be predicted considering a decrease in exports for the fourth month in a row.

The Japanese yen was forced to retreat amid falling demand for safe assets. Recent macroeconomic reports were unconvincing for investors, given the decline in business activity indices in both the services and manufacturing sectors.

CADJPY: h4
However, at the moment the most effective in the short term seem to be the deals in favor of the JPY. In the near future, we can expect at least a price correction, as evidenced by Stochastic and MACD oscillators. In addition, the period of inspiration sentiments on the market may end at any time, given the illusory perspective in the conclusion of a trade agreement between the US and China, taking into account also the risks associated with the political situation in the US. The forecasts for the slowdown of the world economy still remain relevant.