The rates for this currency pair are characterized by stability and average volatility. Since January 2019, we have seen a weak downward movement, which gradually transformed into a flat trend with a range of 79,030 - 84,544 JPY. This fall, there were signs of a trend reversal on the chart, but the incentive wasn't not enough for this to happen, given the protracted process of concluding a trade deal between the US and China.
Economists have repeatedly noted the optimal economic situation in Canada amid other countries and the slowdown in the global economy. This allowed the Bank of Canada to pursue the most stringent monetary policy. However, last week, the CAD came under pressure due to unexpectedly weak employment market reports. As it became known, the Canadian economy lost 71 thousand jobs in November, and unemployment rose from 5.5% to 5.9%. This is the worst indicator since 2009. At the same time, the deterioration is observed for the second month in a row. This week, the Canadian dollar managed to recover due to Tuesday's conclusion of the USMCA trade agreement between the United States, Canada, and Mexico. All parties to the agreement are satisfied with the deal and expect it to stimulate the economy. Also, the rise in oil value and other commodity prices this week, given the continued optimism on the market, is working in favor of the CAD.
Japan's economy is in a more difficult position. GDP growth declined for the third quarter in a row. The GDP in Q3 was 0.4%, although this is in line with forecasts, but shows a slowdown in the Japanese economy. In addition, household spending is falling to the lowest level in 3.5 years, and the producer price index rose by only 0.1% in November, after five consecutive months of decline.
In this situation, we believe that the most effective deals will be to buy, given the potential of the Canadian economy, the economic downturn in Japan, and a weak investor interest in safe assets. The stochastic oscillator confirms the effectiveness of such deals.
