The CADJPY is the combination of two very popular currencies, the Canadian Dollar and the Japanese Yen. The Canadian Dollar is the eighth most popular currency in the world. The Japanese Yen, however, is the fourth most popular currency in the world. Together, they make up the currency pair CADJPY. The CADJPY currency pair is the sixth most popular minor currency pair in the forex industry. The reason it is still regarded as a minor currency pair while being extremely popular, is that it lacks the USD, the world’s most popular currency. Only USD forex pairs have the distinction of being referred to as major currency pairs. It is also worth noting that because this pair does not include the USD, it is also known as a cross-currency pair. Let’s look at each currency individually to have a better understanding of how they work together.
The Canadian Dollar
The Canadian dollar is the official currency of the Maple country, Canada. In terms of trading volume, the Canadian Dollar is the eighth most popular currency. It is also the fifth most held reserve currency in the world. Since 1841, Canada has used the Canadian Pound as its currency. This was back when the British were the dominators of the world.
However, soon the United States became the most popular and the USD was overpowering any other currency out there. In order to improve relations with the United States, they changed their currency to the Canadian Dollar in 1858. The Bank of Canada is in charge of issuing CAD notes. The Canadians are known for their sense of humor and the unique touch they give to the English Language. They commonly refer to their paper notes in the same way. The $1 note is often called a ‘Loonie,’ while the $2 note is often called a ‘Toonie.’
The Japanese Yen
The Japanese Yen is the official currency of the Asian giant, Japan. In terms of trading volume, it is the world’s fourth most popular currency. It is also the third most held reserve currency in the world. The JPY is the most widely used currency in Asia. The Japanese Yen has been in use since 1871. This makes it one of the world’s oldest currencies. Prior to the introduction of the JPY, Japan was relying on Spanish dollars.
It wasn’t until the Meiji government took over that they began printing their own money. The Bank of Japan is in charge of issuing JPY currency notes. It is also worth noting that the yen is one of the most affordable currencies in the region. The Japanese government has attempted to maintain these low rates in order to compete by keeping their export rates low as well. However, due to the sharp rise in the value of Japan’s economy, this is becoming increasingly difficult.
Why Trade CADJPY
Although this is a minor currency pair, it is nonetheless quite popular among traders who want to trade in an efficient and effective manner. After all, not everyone wants to deal with what the USD markets bring to the table. Minor currency pairs have their own little touch that makes them special. Find out below some of the main reasons why you should trade this unique currency pair:
CADJPY is among one of the most volatile currency pairs. Part of this can be blamed on the fact that their individual nations have no correlation with each other, whatsoever. What this means is the two nations have completely separate lives and what impacts one of them does not impact the other. This makes them highly volatile when placed together. Another reason for this volatility is the fact that not many traders trade this currency pair. This is because they prefer to trade major pairs that include the USD. This causes the CADJPY currency pair to have a low trading volume. A forex pair with a low trading volume is more susceptible to price swings when the market becomes volatile. This volatility is great for traders who use the scalping strategy as they’re able to take advantage of these constant price swings in order to make a quick profit.
The CADJPY pair is a cross-currency, which is one of the most compelling reasons to trade it. As a result, they might help to diversify your asset portfolio significantly. Trading a currency pair including the USD provides a variety of challenges. The US dollar is the most often used currency in business. As a result, it suffers the most in the case of an inconvenience.
Any major economic event that occurs anywhere in the world has a direct impact on the USD’s value. As a result, every dollar currency pair will experience difficult trading conditions the majority of the time. Some traders prefer trading currencies that do not contain the USD in order to avoid market volatility. The CADJPY is an outstanding example of a currency of this type. The CAD and JPY are two of the world’s most popular currencies. Despite the fact that they are still considered minors, they are unstoppable when combined.
Forecasting market conditions for the GBPJPY is rather straightforward. This is due to the fact that they are most influenced by changes in their respective countries, which are Canada and Japan. Because the USD is the standard currency for global transactions, any changes anywhere in the world would have an impact on a pair including the USD. Similarly, any changes that occur anywhere in the European Union’s 28 member countries would have an impact on a pair that contains the Euro. As a result, maintaining track of every location that may have an impact on a currency pair becomes rather difficult. Forex pairings that are exclusively tied to a certain region, such as CADJPY, are much easier to forecast since we just need to examine their individual economies.
CADJPY Trading Tips
Once you’ve entered the forex market, you’ll almost certainly be flooded with people providing trading ideas and tactics for a price. The market is really popular these days, and everyone wants to make it seem like their technique is the greatest. The fact is that any technique can succeed if you keep focused and don’t give up. Every currency pair thinks and moves in its own manner. Only once we grasp this will we be able to go on to how to perfect it. The following are the top trading recommendations for this unique currency pair:
Although you can generally trade the CADJPY currency pair anytime as long as the market is open, there are certain timings that make the market conditions perfectly ideal for this dynamic duo. The perfect time to trade this pair is when both the London and New York markets are open at the same time. This would be considered between 1 pm and 5 pm GMT. The reason this timing is so ideal is that both Canada and Japan would be awake between this time. Therefore timing is ideal because if any changes were to occur in the economic or monetary policies of these individual countries, they would occur within this time zone. And so, this is why it is important to keep in mind trade timings when trading the CADJPY currency pair.
Day trading is a trading approach in which you open and close a trade on the same day. All deals must be concluded before the market closes, whether they end in a profit or a loss. Scalping is a popular type of day trading method. Traders would open a BUY and SELL position at the same rate for the same currency pair. This allows them to benefit regardless of which way the market swings. When the market falls, they profit from the alternative position that they opened. This method is ideal for EURCAD since this dynamic pair may be quite turbulent at times. Scalping is an excellent approach for capturing earnings between shifting market rates during times of instability.
Range trading is when you use support and resistance levels to determine when to enter a trade. The highest points in a particular chart are the resistance levels. Similarly, the support levels in a particular chart are the lowest points. Understanding the location of these highs and lows is critical to the range trading approach. For example, if the price is approaching a resistance level and you believe it will hold, you can enter into a SELL transaction (go short). If, on the other hand, the price is approaching a support level that you believe will hold, you can execute a BUY transaction (go long). If the price continues to fall below support, you can enter a short position because the support level will no longer be valid. Similarly, if the price continues to rise above the resistance level, you can go long because the resistance level will no longer be valid.
Factors Affecting CADJPY
The CADJPY currency pair can be considered both lucky and unlucky to be part of two economies that are quite active in their exports of valuable goods. These two economies are also well versed in the field of financial politics. They like to keep their citizens on their toes at all times. Here are the top factors influencing the CADJPY currency pair:
Both the Bank of Canada and the Bank of Japan are majorly responsible for any instability in the CADJPY marketplace. The BOC and BOJ release monthly reports and statements regarding updates to any policy changes. These reports also display the economic and monetary forecasts for the upcoming short-term. Any positive results from the BOC will have a positive impact on the CADJPY currency pair. However, any positive results from the BOJ will have an inverse impact on the CADJPY currency pair. The representatives of these individual banks also hold speeches frequently where they explain these results in more detail. These speeches are just, if not more, important in determining the direction of the CADJPY market. From BOC, Sharon Kozicki who is the Deputy Governor of the institution is highly looked upon for his speeches. From BOJ, Haruhiko Kuroda who is the Governor of the institution is highly looked upon for his speeches.
The Gold Industry
Canada is one of the largest exporters of commodities such as gold and silver. Therefore any changes to the demand for these valuable goods will have a direct impact on Canada’s economy.
This can be seen when the demand for gold is high around the world which causes Canada to be able to export more gold than usual. This causes Canada’s economy to thrive which in turn causes CADJPY to increase in value. This can also be seen when the demand for gold is low around the world which causes Canada to not be able to export as much gold as usual. This causes Canada’s economy to suffer which in turn causes the value of CADJPY to fall.
The Technology Industry
Japan is one of the world’s leading exporters of technology. They are also the industry’s largest manufacturer. As a result, any change in demand for technology items will have a direct influence on Japan’s economy and, by extension, the CADJPY. If global demand for technology grows, Japan will export more than normal, causing the JPY to appreciate in value. As a result, the value of the CADJPY would fall. Similarly, if demand for technological items declines, the value of the Japanese yen falls, causing the value of the CADJPY to climb.
The Crude Oil Industry
Canada is among the largest exporters of Crude oil in the world. Therefore any changes to the demand for crude oil will have a direct impact on Canada’s economy, and the CADJPY currency pair as well. If the demand for crude oil increases, Canada will produce and export more crude oil and therefore, their economy will thrive. This will make the CADJPY currency pair increase in value. Similarly, if the demand for crude oil declines, Canada’s economy will also face a decline. This will make the CADJPY currency pair decrease in value.
Most common questions asked by the forex traders about CADJPY:
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