Scotiabank believe that CADJPY will benefit...>

FOREX: Scotiabank believe that CADJPY will benefit from higher crude prices.

- They suggest that "Canada is a large producer of energy products and Japan is

a large consumer of imported commodities given its limited natural resources.

The CAD has one of the stronger, positive correlations with the price of crude

oil among the major currencies whereas the JPY has one of the strongest negative

correlations with crude oil. Crude oil price swings have a significant impact on

relative terms of trade for Canada and Japan and, by extension, a significant

influence on the CADJPY cross in the longer run. The outlook for firm crude plus

positive, longer run technical signals augur positively for CADJPY. Technically,

CADJPY price action is bullish from a short and medium term point of view. Gains

in the cross have stalled around 85.75 over the past week or so but the CAD

remains well-supported on dips and new cycle highs will bolster upward momentum

again. More broadly, CADJPY has reversed strongly from the 80.50 area (also

support from mid- 2017) and is trading comfortably above the 40-day moving

average on the daily chart. We expect gains back to pick up above 85.75 now and

push on towards the upper end of the longer run range now (90/92 area)."