CAD/JPY Signals & Technical Analysis
About the CAD/JPY (Canadian dollar and Japanese yen)
The CAD/JPY pair is the abbreviated term used for the Canadian dollar and the Japanese yen. The pair doesn't have a nickname. Before we get into the particulars, what exactly does CAD/JPY rate mean? The exchange rate tells you how many Japanese yen (the quote currency) are required to purchase one Canadian dollar (base currency). For example, if the pair is trading at 82.99, it means it takes 82.99 Japanese yen to buy 1 Canadian Dollar.
Breaking Down ‘CAD/JPY’
The Canadian dollar is also classified as a commodity currency, as it exhibits a correlation to the energy products crude oil and natural gas. Since the Japanese yen is a first currency (base currency) and the Canadian dollar is a second currency (the quote currency), the pair is called a cross currency pair.
Whereas, the Japanese Yen is classified as a safe haven currency. Before the financial crisis of 2008, several investors would take advantage of ultra-low interest rates from the Bank of Japan to borrow massively in Yen and invest the money abroad.
However, the interest rate differential among the central banks of the BOC and Japan has squeezed significantly considering the global economic downturn, pointing to the unwinding of the carry trade as the value of the Yen rose.
Canadian Dollar vs. the Japanese Yen. if a trader is not sure about trading the US Dollar, the CADJPY is often determined to be a suitable replacement. However, in the past, the historically higher ROI of the Canadian dollar has made CADJPY more sensitive to market-wide sentiment changes than the USDJPY. Also, a large number of energy exports of Canada most notable oil, causes it to be affected by crude oil prices.
Correlation is merely a mutual relationship or connection between two or more things. Positive correlation – The positive relationship merely is when pairs move in tandem with each other.
In the forex world, the SGD/JPY, SGD/JPY, and USD/JPY currency pairs are positively correlated. It's because all these pairs have a Japanese yen in the numerator. So, any change in the Aussie will be reflected in these pairs.
Negative correlation – In contrast, a negative relationship is when forex pairs move in the opposite direction, For example, USD/ZAR, XAU/AUD and USD/CAD
Crude Oil & Loonie: Typically, the price of crude oil has been highly correlated with the Loonie. Therefore, a rise in crude oil prices increases the value of the Canadian dollar and vice versa. Yen is the most important option to the U.S dollar with order currencies there is usually an actual link among the yen and gold: the one and the other assets are negatively correlated with the greenback and both are considered safe havens but the relationship is not an absolute correlation, but also to the current monetary system based on fiat currencies. Accordingly, in some cases the yen and the dollar both lose (or gain) ground against gold.
What Determines the CAD/JPY Exchange Rate?
Several factors can impact the CAD/JPY rate valuation, including:
BOC & BOJ Monetary Policies: The Bank of Canada and the Bank of Japan control the supply of money in the market, to keep the economy on track.
A dovish policy, which is also known as expansionary policy, from either of the central banks, weakens the related currency. In contrast, a hawkish monetary policy (contractionary policy) strengthens the currency.
Economic Events: The movement in the Canadian and Japanese economic events determine the exchange rates. Top of the line economic events includes GDP, Employment Change, Industrial Production, and Consumer Price Index. Better than forecast data increases the demand for related currency and impacts the value of either the Canadian Dollar or the Japanese Yen, causing fluctuations in the CAD/JPY exchange rate.
Major Economic Events:
Gross Domestic Product – the Gross domestic product is the central measure of economic growth in the region.
Employment Change – Both of the currencies are sensitive to changes in employment, as slacks in the labor market cause a drop in Inflation rates.
Consumer Price Index – Since one of the goals of the BOC and BOJ is to maintain price stability, they keep an eye on inflation indicators such as the CPI. If the annual CPI deviates from the central bank’s target, the BOC or the BOJ could make use of their monetary policy tools to keep inflation in check.
The balance of Trade – Canada has an extremely robust trade sector, so currency traders and bank officials alike tend to watch changes in the country’s export and import levels.
Political announcements & natural disasters – Besides the scheduled economic events, political elections, new systems, wars, terror incidents, natural calamities, etc. can all cause severe variations within the CAD/JPY
CAD/JPY Live Rates
- Energy exports
CAD/JPY Price Factors - People, Economic Data, Organizations and People
- Bank of Canada - The Central Bank of Canada takes part in issuing statements and determining the country’s interest rates.
- Canadian Government, the Department of Finance and any policies made by them affecting the economy of Canada.
- Bank of Japan - The official central bank of Japan tasked with issuing financial statements and determining interest rates. The bank has got attention worldwide for its low interest rates. For example in 2016, BOJ introduced a negative interest to offset rising consumer prices. Watch out for key announcements in interest rates changes, and the Bank’s involvement with the bond market.
- Japans government, Key officials like the Prime Minister Fumio Kishida, The Japan Financial Services Authority.
- Japan Statistics Bureau - Traders need to track major statistic releases from the Japan Statistics Bureau. Focus on the following, GDP Figures, Trade Balance Numbers and the Consumer Price Index.
- Japan Meteorological Agency - Japan has faced various natural disasters throughout history. Paying attention to any news from the Japan Meteorological Agency will prepare you for any prudent chances in price patterns due to warnings of Earthquakes.
Standard lot Size: 100,000
Mini lot size: 10,000
One pip in decimals 0.001
Pip Value: $9.00
CAD/JPY - FAQs
CAD/JPY currency pair can be a good pair to trade for this strategy because the Canadian dollar (CAD) and the Japanese yen (JPY) are often correlated with each other. This is because both countries have large export-driven economies, and changes in the global demand for their exports can affect the value of their currencies.
14 out of the 26 major technical indicators are showing potential selling pressure, with only 1 indicator pointing towards buying pressure, and 10 on the neutral side. Only 1 oscillator indicates a buy signal, 9 oscillators are neutral and 1 shows a sell signal. While no moving average is pointing towards buying pressure, according to the latest analysis of CAD/JPY technical history.
The Canadian dollar (CAD) is considered to be a strong currency, as Canada has a stable and diversified economy with a strong export sector. The country is also known for its transparent and well-regulated financial markets, which can increase investor confidence and contribute to the demand for CAD. However, it's important to keep in mind that the strength of a currency can vary over time-based on a wide range of economic, financial, and political factors. If you are interested in trading CAD or other currencies, it's important to carefully monitor market conditions and stay up to date with the latest economic and financial news that could affect the value of the currency.
There are a number of factors that can influence the value of the CAD/JPY currency pair, including:
1. Economic conditions in Canada and Japan: The strength of the Canadian and Japanese economies can affect the demand for CAD and JPY, respectively. Changes in economic indicators such as gross domestic product (GDP) growth, employment, and inflation can all impact the value of the two currencies.
2. Interest rates: Changes in interest rates can affect the demand for a currency, as higher interest rates can attract more investors seeking higher returns on their investments.
3. Political stability: Political stability can affect investor confidence and therefore the demand for a currency. If a country is perceived as having a stable political environment, this can increase investor confidence and demand for its currency.
4. Exchange rate policies: Governments and central banks can influence the value of their currencies through exchange rate policies such as currency intervention or manipulation.
5. Global economic conditions: Changes in global economic conditions can also impact the demand for a currency. For example, if there is increased demand for exports from Canada or Japan, this can increase the demand for CAD and JPY, respectively.