The Japanese yen continues to resist the Canadian dollar, which has been actively recovering over the past 30 days, with support in the form of good macroeconomic reports and rising oil prices. Oil remains in the range of 70+ dollars and the rates are located at high levels. Hurricanes in the United States and the Gulf of Mexico keep troubling the region, causing disruptions in oil supplies in North America.
This week, the Canadian dollar received support due to excellent inflation reports, which exceeded all expectations. At the same time, the JPY is under pressure because according to the reports, there is a tendency to reduce production volumes, and the trade balance turned negative in August, although a surplus was recorded a month earlier. The saving factor for the yen is the pandemic and investors' fears about the global economy. The volume of industrial production in China was below the forecasts and, in general, the Chinese economy is experiencing a slowdown.
On the chart, we can see that the downtrend continues in favor of the yen. This currency has a good chance to strengthen in the midst of the fourth wave of the pandemic. At the same time, we observe attempts to test the resistance line and shift it up. Next week will be less volatile for the CAD/JPY pair. There are no macroeconomic reports and other events important for these currencies expected. At the same time, investors continue to closely follow the situation with hurricanes and damage to the oil industry, but in the long term, these factors will disappear and the Canadian dollar may lose support due to rising oil prices. In these conditions, we consider the deals to SELL to be more effective in the long term.
