The Canadian dollar (CAD) has recently experienced a downward trend, primarily due to weaker oil prices, which are critical for a commodity currency like the loonie. As of September 9, 2025, the CAD is trading at approximately 106.6 JPY, just below its three-month average. This stability reflects a limited range of movement, fluctuating between 105.1 and 108.8 JPY over the past three months.
Market analysts have noted a simultaneous rise in bearish sentiment toward the CAD, with non-commercial net short positions increasing sharply. Following disappointing employment data from both the U.S. and Canada, expectations are building for potential interest rate cuts by the Bank of Canada (BoC). This is placing additional downward pressure on the CAD, particularly against the backdrop of shifting oil prices.
In contrast, recent forecasts are becoming increasingly bullish regarding the CAD. A Reuters poll from early September predicted a 1.4% rise to 1.36 per U.S. dollar over the next three months, with a projected increase of 2.8% to 1.3415 within the year. This optimism stems from expectations that the BoC will soon pause its interest rate cuts, which could bolster the CAD in the medium term.
Turning to the Japanese yen (JPY), its outlook has been impacted significantly by political changes following the resignation of Prime Minister Shigeru Ishiba. The yen experienced a steep decline amid uncertainty surrounding future fiscal policies, which are now in the hands of a new leadership contest. This political instability adds to the complexity of the JPY's performance, particularly amidst speculation of upcoming changes in Bank of Japan (BOJ) monetary policy.
Additionally, increasing expectations of a potential rate cut by the U.S. Federal Reserve have further influenced the global financial landscape, impacting currencies including the JPY. As of now, the ongoing leadership developments within Japan raise concerns about the path of economic recovery and fiscal management, which could produce further volatility in the yen.
In summary, CAD to JPY exchange rates remain sensitive to both commodity price fluctuations and macroeconomic indicators. Falling oil prices place the CAD under pressure, while political uncertainties complicate the JPY's outlook. Continued monitoring of these factors will be essential for anticipating future movements in the CAD/JPY exchange rate.
