CADJPY Weaker Despite Oil Rebound and Weak Inflation
The CADJPY was weaker this week despite a recent bounce in oil prices and weaker Japanese inflation. Crude oil has bounced back with a gain of $3 on the week and this usually impacts the pair due to the difference in Canada’s export power in oil, versus Japan’s import dependence.
Japanese inflation was released today and the year-on-year figure was 0.2% higher compared to an expectation of 0.3% as the virus effects continued to hamper consumption.
Japan’s new Prime Minister, Yoshihide Suga, was sworn in this week after the resignation of Shinzo Abe. Early polls show strong public support for the new leader- Kyodo news said its telephone poll showed 66.4% of the public supported the PM, while a separate survey by the Nikkei paper and TV Tokyo said 74% were in favour of the new Cabinet.
Japan’s long-fight with deflation showed signs of ending at the end of 2019 with a 0.8% and 0.7% print but the rate has decreased again with the global crisis. Canada’s inflation rate has suffered even more with a collapse from 2.2% to 0.1%, while unemployment in the two countries are vastly different with 3% in Japan compared to Canada’s 10.2%. The picture between both countries should continue to see Yen strength and the Japanese currency also has the potential of safe haven flows if global growth suffers.
CADJPY Technical Outlook
The CADJPY dropped below the 80.00 level this week and is now probing below the 50-day moving average. The first target for further lows would be the uptrend support line at 78.75 with a stronger support level at 78.00. The Investing Cube team is available to assist all levels of traders with a Forex Trading Course or one-to-one coaching.