The downtrend formed in June continues. The Canadian dollar was under pressure due to falling oil prices after OPEC's decision to increase oil production from August. This caused a wave of sales, as traders were afraid of an oversupply of oil amid an increase in the number of coronavirus infections in the world. Nevertheless, we are now seeing a recovery of the Canadian dollar after oil returned to the levels of $70+.
The recovery of the Canadian dollar is very rapid because the situation in the Japanese economy is disappointing: inflation is close to zero and business activity is below 50 pips. Thus, Japan is significantly lagging compared to the rest of the key countries in economic recovery, and this puts pressure on the JPY. The status of a safe asset doesn't help significantly. Therefore, the Canadian dollar has good chances in the confrontation with the JPY.
All the important reports for both currencies remain ahead, but they will be published very soon. Today we are waiting for the publication of the consumer price index in Canada, and at the end of the week - Canada's GDP in May. Also, data on industrial production output will be published in Japan. Technical analysis tools are multidirectional, but we believe in the potential of the Canadian dollar and believe that the price correction is not yet complete, and perhaps we are dealing with a trend reversal. Therefore, our choice today are the deals to BUY.
