The Canadian dollar has seen some declines in its value recently when compared to the Japanese yen. Earlier in the month, it appeared to be riding high. It reached the 81.50 level at one stage – though this kind of success was not to last. It is now closer to an important moving average level calculated over a period of several months. This has boxed it into the 78.83 area on the price charts.
According to analysts, there is a significant chance that it will drop in value even further as time goes on. One strategist is predicting that the 76.39 point could be on the cards, especially if support levels that currently exist are surpassed. While it appears that the Canadian dollar is going to be largely unable to surge in value, strategists also explored what might happen if this unlikely eventuality did come to pass. If it did, the Canadian dollar may be able to climb as high as just over the 79 level.
However, from there, it could run into resistance. Part of the reason for the Loonie’s decline in its pair with the safe-haven yen is that Japan has been somewhat more successful in containing the second wave of the coronavirus pandemic. While Canada has reimposed some form of restrictions on commerce and day-to-day life (in common with many countries), Japan appears to be avoiding that scenario. Whether this will hold for the long term, though, is still not clear.
Turning away from both the price charts and the impact of the coronavirus pandemic, there are some important events for both currencies coming up on the economic calendar. A consumer confidence index came out of Japan at 5am GMT on Friday 2nd October, which covers the month of September. A Jibun Bank Services Purchasing Managers’ Index (PMI) will be out of Japan at 12:30am GMT on Monday of next week. This will again cover September, and is forecast to show a change from 45 to 45.6. Tuesday of next week will see an imports and exports release from Canada. These figures are due to come out at 12:30pm GMT. Wednesday, meanwhile, will kick off with a preliminary leading economic index out of Japan at 5am GMT, covering the month of August. This is set to show a decent rise from 86.9, where it was last recorded, up to 89.4. A preliminary coincident index for August will also be out in the same time slot. Canada’s purchasing managers’ index, from Ivey, will come out at 2pm GMT. This will focus on how the business sector there performed during September. The day will be rounded off with an update on Japan’s current account figures for August. This is due out at 11:50pm GMT.
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