Should Traders Buy the Canadian Dollar with Yen?

Nomura Holdings is recommending that investors buy the Canadian dollar against the yen, according to Bloomberg. The trade recommendation is based on the assumption that the Canadian Central Bank will continue to hike interest rates, while Japan's trade situation will worsen. So far this year, the Canadian currency has strengthened against the yen nearly 3%. The Canadian currency may have been strengthening on the back of rising commodity prices. Canada is a major exporter of natural resources including oil. Japan has entered yet another recession following the natural disasters in March. Though the yen initially strengthened significantly, the Japanese Central Bank worked to flood the market with yen and weaken its currency. If Nomura Holdings' recommendation proves profitable, traders may wish to consider alternative positions. ProShares UltraShort MSCI Japanese Fund EWV may do well if the Japanese economy continues to weaken.