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Brent jump strengthens CAD while weighing on JPY in CAD/JPY setup

The move is tied to a Brent rally above $90, alongside higher global bond yields and recent Canada inflation and jobs data that reopen Bank of Canada rate-hike discussion.

Reported · Written up by our desk · Major Pairs

Brent’s move above $90 is driving a two-sided reaction in CAD/JPY, with the oil-linked boost to Canada’s terms of trade supporting the Canadian dollar while higher global bond yields intensify yen funding pressure, Action Forex said.

The backdrop includes an Iran-related oil shock, with a June 17 ceasefire framework that expired on August 17 without renewal, leaving no clear diplomatic settlement. Higher energy and freight inflation have helped keep yields elevated, supporting the yen’s downside in funding trades.

Action Forex also pointed to Canada-specific data that differentiate the current move from an earlier June rally that was driven more by yen weakness alone. It cited May GDP rising 0.3% month over month versus a 0.2% forecast, employment increasing by 75K versus 15K expected, unemployment falling to 6.4% from a higher prior level, and CPI rising to 3.0% year over year from 2.8%, above consensus.

For rates, Action Forex said US 30-year yields have climbed to around 5.31%, the highest in 19 years, while the US 10-year is near 4.74%. It added Germany’s 10-year Bund is about 3.22% and Canada’s 10-year touched 3.75%, contributing to the broad yield move that also pressures the yen.

Latest closeBrent $88.59 ▲1.8%

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