The CAD/JPY rates continue in the frames of a weak downtrend. We could expect a more rapid weakening of the Canadian dollar, considering the strong pressure for this currency in recent times due to the drop of oil prices. Yet, the CAD managed to find support and even strengthened against many currencies due to statements by the Bank of Canada's representatives. They spoke about a high probability of a rate hike, given the continued economic growth. Therefore, an increase of the rates this year can be considered almost certain. To the strengthening of the Canadian dollar also contributed disappointing statistics from Japan. Trade balance amounted to only 0.13 T versus the expected growth of 0.35 T. Japan's trade deficit widened to JPY 203.4 billion in May, while investors were expecting a surplus +43 billion. The growth of exports also does not match nvestors' expectations and amounted to only 14.9 percent, while imports increased more than expected - 17.8% vs. the expected 14.5%. The positive thing here is only the fact that exports continue to grow for the sixth consecutive month.
In the near future, the rates of the CAD/JPY will continue depending on the situation on the oil market because oil prices have already continued to test new psychological marks - now oil is already less than 44 dollars for barrel CL/WTI. Some volatility might persist until June 30, when we would have a real Canadian-Japanese day: the market will get a lot of important statistics, such as Canada's GDP, the unemployment rate in Japan and the consumer price index PMI.
Considering the many factors against the CAD, the most effective actions would be short deals on the trend, which is confirmed by the Stochastics oscillator.
