In April we saw a tendency to increase the demand for risky assets amid a decrease in geopolitical tensions. This led to a weakening of the yen, which peviously strengthened due to geopolitical tensions and a possible trade war. The extremely soft monetary policy of the Bank of Japan, which is not going to change the rate until it approaches the target inflation rate, has a negative impact on the yen. The Canadian dollar has received a significant stimulus amid this - high oil prices and the achievement of long-term price peaks, as well as stimulus due to the optimal situation in the Canadian economy, which has allowed the Central Bank and its head, Stephen Poloz, to maintain an aggressive monetary policy, unlike his colleague from Japan. According to Stephen Poloz, Canada's economy is recovering from the crisis caused by low oil prices, as evidenced by the achievement of 40-year lows in unemployment, so the rate will be increasing in Canada if the situation does not change.
Two weeks ago the rates consolidated in the range of 84.32 - 85.7 JPY. Both currencies for a while couldn't find new incentives to growth. Economic statistics in Japan do not impress investors and do not demonstrate economic growth that would allow the Bank of Japan to change its position on monetary policy. In Canada the situation is better and there are not enough risks for the Canadian economy that would put pressure on the CAD, but the decision of the Bank of Canada last week to leave the rate at the current level could not have a positive impact on the Canadian dollar, although investors expected such a decision and expect the Bank of Canada to raise the rate in July. As a result, volatility has decreased significantly.
Next week on Tuesday Canada's GDP data is expected to affect the rates. Investors expect GDP growth of only 0.1% in February, so it will be easy for the Canadian economy to exceed these expectations. The stochastic oscillator signals the rates in the oversold zone, on the basis of which the deals to Buy can be considered as the most optimal in this situation. The entry points to the market can also be specified at the levels 84.32 and 85.7, the breaking of which will mean the resumption or change of the trend. It should be noted that reaching the point 85.7 at the moment seems most likely in the near future.
