The Canadian dollar against the Japanese yen cross pair is sometimes used as an alternative to the USD/JPY pair. The CAD/JPY pair is more affected by the sentiment that is prevalent in the market because of the higher yield offered by CAD.
The Canadian dollar is the official currency of Canada. The country depends on its exports of crude oil, gold, sawn wood and raw aluminium. Any major price fluctuations of those commodities may result in the currency's rise or decline. The Canadian economy depends on the U.S. because it is the largest export market and the country most imports come from. Any severe blow for the U.S. economy will therefore affect the Canadian dollar.
The Japanese yen is the currency of Japan and the third most traded currency in the world which is also widely used as a reserve currency around the world. The Japanese economy is one of the largest with Japan being one of the largest exporters in the world. However, it has recently encountered problems resulting from its low fertility rates. Japan has a rapidly aging population and fewer young workers to support the economy. Another issue is deflation which threatens to make the yen so strong that it renders the Japanese exports less competitive.
Factors affecting the CAD/JPY rate include general economic indicators, such as information on employment, inflation data, retail sales, industrial production, trade balance and the release of GDP data, as well as the central bank decisions regarding the interest rates in both countries. Political events, natural disasters and various government policies can impact the CAD/JPY exchange rate significantly.
Risk warning: Trading in FX and CFDs entails high risk of losing capital.
