This currency pair remains one of the most unstable on the market, under the influence of many factors. The current trend can be described as upward, in favor of the Canadian dollar, but the support line is already moving down amid the strengthening of the yen as a safe asset, against most currencies. Recently the JPY has also been supported by strong macroeconomic statistics. Today, in particular, data on Japan's GDP shows an increase by 0.5% in the second quarter, which exceeds investors' forecasts. A positive signal for the Japanese economy is also an increase in consumer spending by 0.7%, which is twice higher than investors' forecasts. Thus, despite the questionable perspectives for the world economy considering the trade war, Japan is still the country that is less exposed to risks. In addition, some officials of the Bank of Japan are not so categorical and ready to consider tightening the monetary policy in the future.
The Canadian dollar, being mostly a commodity currency, is a vulnerable against the Japanese yen. Oil prices are falling due to a decrease in oil demand in China and the perspective for further decline in oil demand due to the worsening of trade relations between the US and China. Today investors expect data on the employment market in Canada, which will reflect the current situation in the Canadian economy. Negative signals were received earlier. In particular, the data on the real estate market shows a decrease in the number of permits issued for the construction of new houses, as well as the number of completed construction projects. In addition, the PMI business activity index from Ivey fell to 61.8 points, while the index was expected to grow to 64.2 points.
The current situation matches the medium-term forecasts of analysts who predicted the strengthening of the yen as a safe asset. Only the policy of the Bank of Japan, which many investors find inappropriate, given the good situation in the Japanese economy, can nullify the yen's strengthening. So far, the head of the Bank of Japan has been categorical and not interested in a strong yen. However, if economic growth resumes, the Bank of Japan will be forced to change its position in order to avoid overheating the economy.
At the moment, we can consider the decline in prices as a price correction, which has already been completed. This is confirmed by the Stochastic and MACD oscillators which signal the rates are in the oversold zone. In the short term, the most effective would be the deals to Buy. However, in medium-term trading, you can open the deals in favor of JPY.
