CADJPY Analysis: Global risk mitigation may weaken the yen

May 25, 2020

By IFCMarkets

Global risk mitigation may weaken the yen

The upward movement shows the strengthening of the Canadian dollar and the weakening of the Japanese yen. The share of energy products in Canada’s exports reaches 30%. They include oil and petroleum products, natural gas and coal. The cost of energy products correlates with oil quotes. As a rule, the Canadian dollar strengthens with rising prices for hydrocarbons. There are chances that the Canadian economy can overcome the negative impact of the coronavirus pandemic without heavy losses. Retail sales in Canada decreased by 10% in March 2020 compared to February figures, as expected. However, retail sales except automobiles fell only by 0.4%. This is much better than the forecast of -5%. Another positive factor for the Canadian dollar may be deflation (negative inflation) in April. The consumer price index fell by 0.2% year-on-year. Let’s recall that the Bank of Canada rate is + 0.25%. A regular meeting of the Bank of Japan took place on Friday, at which the rate of -0.1% was maintained. The regulator confirmed that it will continue to issue yen in order to support Japanese companies. Inflation in Japan in March was + 0.1% in annual terms. The ratio of inflation and central bank rates of the two countries, theoretically, can support the Canadian dollar against the yen.

Indicator VALUE Signal
RSI Buy
MACD Buy
MA(200) Neutral
Fractals Neutral
Parabolic SAR Buy
Bollinger Bands Neutral

 

Summary of technical analysis

Order Buy
Buy stop Above 78
Stop loss Below 74,7

Market Analysis provided by IFCMarkets


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