The JPY being a safe asset has a perspective in the long term but now the deals on the trend seem the most effective.
The rates continue in the frames of the upward trend started in March 2018. During this time, the Canadian dollar received support due to the growth of oil prices, a balanced monetary policy and a good economic situation. A distinctive feature of this trend is its stability and optimal volatility, which couldn't be said about the CAD/JPY rates before. At the same time, the Canadian dollar, being a commodity currency, was least affected by the trade conflict between the US and China. The trade conflict with Canada and the US was recently resolved with the signing of a new agreement to replace NAFTA.
The situation changed somewhat this month: oil was rapidly losing its value and demand for risky assets began to decline amid decreasing in the US stock market and investors' fears about the slowdown in the global economy. Therefore, the Japanese yen received some support, saving its status of a ”safe asset " among investors. Nevertheless, the Japanese yen is under considerable pressure due to slowdown in the economy, as well as the Bank of Japan's soft monetary policy and lack of interest in strengthening its currency. The latest macroeconomic reports showed a decline in industrial production by 1.1% in September, against the expected on the market -0.2%; the volume of construction of new homes fell by 1.5% against the expected decline of only 0.5%, and the index of household confidence fell to 43 pips. Although the unemployment rate remains traditionally low and decreased to 2.3% in September, we can see a continuation of the economy's downturn.
Canada is waiting for new reports. This week will be published data about the GDP and the trade balance, which certainly affects the cost of the CAD. In this situation, the most optimal would be the deals on the trend, which is confirmed by the Stochastic oscillator.
