The uptrend continues. A strong recovery in China's manufacturing activity and economy is contributing to the growth of commodity assets. Demand for safe assets is limited despite the continuation of the pandemic. As for oil prices, they are confidently holding above $40, although this week they fell sharply by 6.75% amid a weak demand.
However, this week, not only external, but also internal factors contributed to the strengthening of the Canadian dollar. Reports published for July showed a lower-than-expected trade deficit, while import-export indicators show growth, which confirms the recovery in business activity. The level of labor productivity, which in the second quarter increased by 9.8%, is 9 times more than expected.
Despite the record growth in industrial production, the JPY is not yet strong enough to resist the Canadian dollar. We expect the trend to strengthen the Canadian dollar against the yen to continue. In particular, next week the Canadian dollar may receive support from the results of the Bank of Canada's meeting and the trade balance in China. Most technical analysis tools also tend to the deals in favor of the CAD.
