The CAD is currently bullish against the JPY, primarily supported by positive Canadian economic data and rising oil prices.
Key drivers include:
- A stronger-than-expected jobs report from Canada reveals a drop in unemployment, which boosts CAD confidence.
- Oil prices are at 30-day highs, reinforcing the CAD's strength as a commodity-linked currency.
- The Bank of Japan's recent rate hike shows efforts to combat high inflation, but expectations for future rate increases remain cautious.
In the near term, the CAD/JPY is likely to trade within a range that reflects its recent stability but remains influenced by economic data and commodity prices.
Upside risks include a further increase in U.S. Treasury yields, which could continue to support the CAD. Conversely, a sudden downturn in oil prices or intervention measures from Japan could weaken the CAD against the JPY.