Canada’s economy is heavily reliant on oil exports. Rising oil prices typically strengthen the CAD.
If crude oil prices rebound, CADJPY could move higher. Economic Outlook:
Recent data might indicate improving Canadian GDP growth or employment figures, supporting CAD strength.
The Bank of Canada’s monetary policy stance (e.g., potential rate hikes or a neutral tone) can boost CAD sentiment.
Bearish JPY Factors:
BOJ Monetary Policy:
The Bank of Japan continues its ultra-loose monetary policy, suppressing JPY strength.
Low interest rates and yield curve control weaken the JPY compared to higher-yield currencies like CAD.
Risk-On Sentiment:
During December, markets often exhibit a "Santa rally" (bullish equities). Risk-on sentiment favors CAD over the safe-haven JPY.
Seasonality:
Historically, CADJPY trends bullish in mid to late December due to: Increased demand for risk assets. Seasonal oil demand, which strengthens CAD. Year-end positioning and reduced JPY demand in global markets.