Higher Oil Prices Boosting CAD
CADJPY is on watch here following a bullish channel break yesterday. Rising oil prices and a less-hawkish BOJ meeting mean that the macro backdrop has turned firmly in favour of a higher CADJPY rate. The conflict between Israel and Iran has seen crude prices spiking to highs not seen since early 2021. While some of the initial move has receded for now, crude remains well bid today and with the prospect of a further escalation in the conflict, crude remains vulnerable to upside price shocks. For CAD, higher oil prices are a direct positive and any fresh rally in crude should keep CAD well-bid near-term.
BOJ Expectations
On the JPY front, today’s BOJ meeting has left the yen a little muted. The BOJ held rates unchanged as expected while signalling that it will slow the pace of QT from April 2026. While this guidance doesn’t necessarily mean the BOJ will step away from tightening in the rates channel, it’s been taken as a sign that the BOJ’s outlook has turned less hawkish, in line with rising risks from global geopolitical uncertainty and the US trade war. Any downside surprises in Japanese data near-term should feed into a softer JPY, keeping CADJPY primed for further upside. Similarly, any upside surprises in CAD data should help entrench a stronger CAD rate also.
Technical Views
CADJPY
The rally in CADJPY has seen the market breaking out above the bear trend line and above the 105.90 level. While above this level, and with momentum studies bullish, focus is on a continuation higher towards the 111.32 level next.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.