CAD/JPY: fundamental review and forecast
CAD/JPY rates continues in the frames of a weak downtrend. We could expect more rapid weakening of the Canadian dollar, considering strong pressure for this currency in recent times, due to falling of oil prices. But CAD managed to find support and even strengthened against many currencies due to the statements of the Bank of Canada's representatives. they said about high probability of a rate hike, given continued economic growth. Therefore, increasing of the rates this year, can be considered as almost solved question.
Contributed the strengthening of the Canadian dollar disappointing statistics from Japan. Trade balance amounted to only 0.13 T amid expected growth in 0.35 T. Japan's trade deficit widened to JPY 203.4 billion in May while investors were expecting a surplus +43 billion. Growth of exports also do not match with investors' expectations and amounted to only 14.9 percent, while imports increased more than expected - 17.8% vs. expected 14.5 %. The positive thing here is only fact that exports continues to grow for the sixth consecutive month.
In the near future, the rates of CAD/JPY will continue depending on the situation on the oil market because oil prices have already continued to test new psychological marks and now it's already less than 44 dollars for barrel CL/WTI. Unlikely volatility will be high until June 30, when we will 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 a lot of factors against CAD, the most effective can be considered short deals on the trend, that confirmed with the Stochastics oscillator.