- CAD/JPY Weakens as Bank of Canada Makes Third Consecutive Interest Rate Cut
- Japanese Yen Strengthens on Rise in Real Wages and Growth Outlook
- Decline in WTI Crude Oil Prices Adds Pressure on CAD/JPY Pair
The CAD/JPY pair is trading lower at 106.10s on Thursday as the Canadian Dollar weakens due to falling oil prices and expectations of further interest rate cuts by the Bank of Canada. Lower interest rates have a negative impact on a currency as they reduce foreign capital inflows.
This marks the third consecutive day of losses for CAD/JPY following the recent interest rate cut by the Bank of Canada amid concerns about inflation and economic growth.
The Bank of Canada Governor, Tiff Macklem, expressed concerns about the economy being too weak and hinted at possible further rate cuts if inflation continues to decline. This dovish stance has put pressure on the Canadian Dollar.
On the other hand, the Japanese Yen has received support from a rise in real wages in Japan, indicating a positive outlook for growth. This has strengthened expectations of interest rate hikes by the Bank of Japan in the near future.
Despite some moderate comments from BoJ Board Member Hajime Takata, the overall sentiment remains bullish for the Japanese Yen, especially with the uncertainty surrounding the pace of rate hikes.
Additionally, the decline in WTI crude oil prices below $70.00 a barrel has added further pressure on the CAD/JPY pair. Lower oil prices are detrimental to the Canadian Dollar, while benefiting Japan as a major oil importer.