The Canadian dollar jumped against the Japanese yen as oil spiked in the early hours of Monday.
CAD/JPY
The Canadian dollar rallied against the Japanese yen rather quickly during the open on Monday, which makes sense considering that the crude oil market spiked quite viciously.
Furthermore, it makes even more sense in this pair because the Japanese import 100% of their crude oil, so it all ties together to take advantage of how the markets have been pricing in the idea of crude oil flows. With this being the case, I think it's very important to be reasonable in understand that not only does oil push this pair, but you also have to keep in mind that the entirety of the situation that the Japanese find themselves in is something that's worth paying attention to.
After all, the Bank of Japan finds itself in a situation where it has massive debt that it has to overcome, and it's also in a situation where the demographics dictate that perhaps it'll be very difficult for Japan to ever have any major normalization of interest rates as the workforce will be an issue. In fact, this is a generational issue that Japan faces so a lot of well-respected analysts believe that the Japanese yen is going to have massive problems for quite some time.
JAPANESE YEN STRUCTURAL CHALLENGES
Looking at this chart, I think you have a significant support level near the 115.50-yen level as it was the scene of a breakout. And when you look at the overall consolidation, it should at least in theory based on the measured move send the Canadian dollar to the 118-yen level.
I don't have any interest in shorting this pair and I do think that it remains very much buy on the dip as things are playing out with oil rising and of course the issues that Japan had to begin with.