CAD/JPY is trading near multi-year lows, and this is a rather dangerous moment when, on the one hand, it is interesting to open Buy deals at the lowest price, and on the other hand, there is no understanding how the Canadian dollar will find incentives for growth in an environment where all external and internal factors say the opposite. Perhaps now is the time for a decline to the prices that we saw in 2021?
Why will it be difficult for the Canadian dollar to resist even a weak and inert yen? - Recent bank failure events in the US are causing panic and encouraging safe havens. Demand for risky assets continues decreasing. If the bankruptcies also affect the Swiss banking system, which is very likely, then this could cause a massive banking crisis. Another argument why the CAD will be weakened is the Bank of Canada, which, analyzing the reasons for the bankruptcy of a successful bank, may come to the conclusion that the reason is a high interest rate, therefore the Bank of Canada may become more moderate in the growth of rates. The fall in oil prices does not leave the Canadian dollar any chance to fight, and the price recovery can and will be, but not as confident as the fall, and may be delayed in time.
Weak data in China on the growth of unemployment and a weak growth of production output put additional pressure on demand for commodity assets and give us a clear negative signal regarding the Canadian dollar. Technical analysis tools are also clearly show us a strong Sell signal. Therefore, today we sell CAD and buy safe assets.
