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CAD/JPY: Fundamental Review & Forecast

Published on: 25/01/2017

Since November the rate of the CAD/JPY pair has been in the frames of a rapid upward trend, but has changed again to a flat trend. The volatility has dropped significantly and the currency pair, which is characterized as unstable and unpredictable, became stable, with rates in strictly defined frames. The reason for this is not only the seasonal recession, but also the promised protectionist policies of Donald Trump and the value of the US dollar which impacts both currencies and causes pressure for the economies of Japan and Canada.

The new President has already withdrawn the USA from the Trans-Pacific Partnership free trade agreement. He also plans to withdraw from the agreement about the North American Free Trade Zone with Canada (NAFTA). This could negatively affect the Canadian economy which is dependent on exports to the United States.

However, the economies of Canada and Japan are on the rise. Additionally, the consequences of U.S. policy-making can be overrated. In particular, exports to Canada grew by 4% and exports to other countries except the United States grew in December at 9.5%, which is a record for the last 5 years. The imports grew by only 0.7%. Inflation in December rose by only 1.5%, while retail sales in December rose, contrary to the predictions.

In Japan everything looks good in the economy: exports increased by 5.4% for the first time in 15 months and maintained a positive trade balance four months in a row. Exports to China rose to a record level of 12.5%.

With a flat trend you can open trades on the price correction. At the moment you can trust the MACD oscillator, opening the deals to Buy in short-term trading.

Note: This article is provided as a recommendation for trading and SuperForex is not responsible for the result of transactions based on this analysis.
Please be aware that CFD and FX trading on a margin carry high levels of risk. Traders should ensure they understand the risks associated with leveraged CFD and FX trading before deciding to trade.


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