The rates continue in the frames of the upward trend which was formed a year ago. The situation on the market has changed compared to last year, especially for the Canadian dollar. Last year the CAD was under pressure due to low oil prices, now it is quite the opposite - it is supported by high prices for oil and positive forecasts about the future price of oil in 2018.
A week ago the Canadian dollar came under pressure because of the decision of the Bank of Canada to leave interest rates unchanged. Now this situation repeats itself in Japan. This week the Bank of Japan left its monetary policy unchanged. Thus, the interest rate remained at the level of -0.1%. In addition, the Bank of Japan lowered inflation expectations. They suppose that inflation is unlikely to reach the target of 2% in 2018-19, and even with further stimulation of the economy, it would take years for inflation to reach the target 2%. Low inflation continues to be a major problem for the Bank of Japan after the years of deflation. Economic statistics are also not in favor of the yen. On Monday the market received new data about the volume of retail sales in Japan which rose in September by 2.2% against the expected 2.5%. The index of household expenditure in September decreased in 0.3% YoY, while economists had expected growth by 0.7%.
Weak economic statistics were also not in favor of the Canadian dollar and didn't impress the market, but as mentioned before, the rapid increase of oil prices and the positive expectations of investors about the oil market support the CAD at a high level. Amid the weakening of the yen, the Canadian dollar has all chances to continue its growth in the frames of the current uptrend.
On Friday the markets expect new data about the employment market in Canada and the trade balance, which can impact the rate of the CAD/JPY. At this point, the MACD and Stochastics oscillators indicate the efficiency of the the deals to BUY in the near future. These deals may be effective in the short- and long-term perspective.
