No pair has been more beaten up by tariff talk than CADJPY. The cross got it from both sides as it suffered declines from risk aversion flows and from the idiosyncratic risk facing Canada which on the sharp end of the stick in both Nafta negotiations and general global tariff threats.
Today, however, was the first bright day for the pair in days as Trump’s tariff threats are universally opposed by those within his own party as well trading partners from abroad. Although its too early to tell, Trump may indeed back off or water down his initial proposals which will provide further relief to the market and to the cross.
Tomorrow the market will also hear from BOC, and while no one expects the central bank to raise rates, there is little evidence for BOC to be overtly dovish as growth up North remains positive and further policy tightening will have to come. So if BOC simply stays neutral and tariff threat begins to fade, CADJPY has a chance to recover further.