EXCHANGE RATE OF CADJPY ON FOREX

One of the lesser-known crosses, CADJPY or CAD / JPY, in fact, doesn’t actually have a kind of alias. It shows how much Japanese yen is needed to buy one Canadian dollar.

Pair characteristics

Although this is a lesser-known pair, that usually has less volatility, it still has a significant amount of liquidity, provided by traders. The economy of Japan, which reached $ 4.87 trillion in 2018, is almost four times larger than the economy of Canada, which is $ 1.65 trillion over the same period, although its territory is much smaller. Both countries are among the largest five partners in import-export.

Although both economies are highly developed and rich, they are completely different. Canada is focused on the export of goods, while Japan is focused on high technology and has to import a lot of raw materials, in many cases, from Canada.

The reputation of Japan for financial stability means that it has become one of the largest safe haven, and attention of Canada to the commodities and relatively higher rates make it the target of speculative sales deals.

Major players

Monetary policy in attitude to the Canadian dollar is set by the Bank of Canada, which has a single mandate to maintain inflation at the level of two percent, and the midpoint within the window is in the range from 1% to 3%.

The monetary policy for yen is determined by the Bank of Japan, which has a tertiary inflation rate of two percent per year. However, this goal has not been reached for a long time, because bank supports one of the longest quantitative easing programs in history.

Trading Characteristics

CAD / JPY corresponds to the classic speculative currency pair and acts so. It’s often seen as a replacement for AUD / JPY or USD / JPY.

The dependence of Canada from commodities causes the fluctuations in the exchange rates of a relatively more stable yen. As the global economy improves, the commodity raises in dollars. This reflects a search for profitability, as investors seek higher interest rates for dollars during periods of economic growth, but fall back to the yen in times of economic uncertainty.

This pair acts more in accordance with long-term fundamentals, such as the economic growth of the corresponding countries, percentage rates and commodity prices.

It should also be highlighted that the United States is the largest trading partner of Canada and Japan, that’s why the news from the largest economy in the World also can affect the pair, but less.

In fact, this pair is often used instead of USD / JPY, when traders are wary of the dollar, but want to trade the yen. The main export of Canada is oil; therefore, oil prices also influence the pair.