The CAD/JPY currency pair maintained stability on Monday, as the Canadian Dollar, which is closely tied to commodity performance, faced headwinds from softer crude prices.
Canada is vulnerable to declines in oil, which can weigh on foreign capital inflows and dampen support for the loonie.
WTI crude prices fell after a Reuters report on Sunday indicated that the United States and Iran had agreed to temporarily halt recent clashes in the Gulf and resume discussions on their dispute over the Strait of Hormuz.
At the same time, concerns over a possible foreign-exchange intervention by Japanese authorities remain elevated as the Yen trades near historically sensitive levels.
Japan’s Chief Cabinet Secretary Minoru Kihara reiterated last week that authorities stood ready to respond to excessive moves in the currency market, signaling a willingness to “take appropriate action” if deemed necessary.
The policy stance of the Bank of Japan continues to be a major driver for the Yen. BoJ board member Naoki Tamura, regarded as hawkish, stated last week that the central bank should raise interest rates once every few months and be prepared to accelerate the pace of tightening. He underscored the BoJ’s attention to inflation risks that may arise from the Middle East conflict.
The BoJ’s next monetary policy meeting is scheduled for July 30-31.
A Reuters poll conducted before the June hike indicated that most economists anticipated a rate increase to 1.25% in the fourth quarter, highlighting expectations of a gradual normalization path.
The CAD/JPY currency pair was last up 0.09% on the day to trade at 114.07.
TradingPedia.com is a financial media specialized in providing daily news and education covering Forex, equities and commodities. Our academies for traders cover 
