Executive Summary
CAD/JPY trades at 114.07 as of March 31, 2026, with one Canadian dollar buying 114.07 Japanese yen. The pair has declined approximately 2.0% over the past month from the 117.20 area (52-week high) but remains up 7.0% year-on-year and 3.2% over six months, reflecting the dominant oil-for-carry regime that has driven this cross since the Iran conflict began on February 28. The bilateral narrative is uniquely compelling: Canada is the G10's premier oil exporter while Japan is the G10's most vulnerable oil importer — the Iran-driven $103/bbl WTI environment creates a structural tailwind for CAD/JPY that is partially offset by the BoJ's imminent hike to 1.00% at the April 27-28 MPM (~70% OIS probability) and elevated MoF intervention risk near the politically critical USD/JPY 160 level. The +150bps BoC-BoJ carry differential provides a modest coupon for long positions, but the carry-to-vol ratio is unattractive at approximately 0.14, well below the 0.40 threshold that attracts aggressive accumulation. Our tactical stance is mildly Bearish CAD/JPY (conviction 2/5, confidence 52%) as the BoJ hike catalyst dominates over 2-4 weeks, while the strategic stance is Neutral (conviction 2/5, confidence 50%) as the oil windfall and BoJ normalisation create genuinely offsetting forces over 1-6 months.