After a massive 2000 point drop CAD/JPY has been in a slow but steady rebound for the past three months making higher lows with each successive wave up. The recovery has been driven by firmer oil prices, but with crude leveling off at the $45/bbl level the pair may need another catalyst to push it higher.

One possibility is the improving tone in USD/JPY trade which appears to have bottomed out and is now making a recovery move. Although few traders expect the Fed to do anything at the upcoming June meeting, better US data could provide scope for further rally in the pair. That’s why all eyes will be on US Retail Sales tomorrow to see if the consumer is finally ready to spend. The market is looking for a rebound of 0.3% from -0.1% the month prior. If the news surprises to the upside it could lift USD/JPY towards 110.00 figure and push CAD/JPY towards 86.00

CAD/JPY has been on a bounce lately boosted by recovery in the oil prices and better risk appetite. But the pair may be running out gas, as today late day reversal suggests that 84.00 may be too much for the unit. The drop in the pair was due to late day fade in oil prices as well as a wobbly close in stocks with both loonie and USD/JPY dropping as the day came to a close.

Tomorrow the market is going to get a look at the Canadian Retail Sales which given the upside surprise in today’s Wholesale Sales number could beat their mark as well. That would bode well for the loonie as it would suggest that the Canadian consumer remains healthy despite the complete collapse of oil prices over the past few months. If the economic data provides loonie with a boost, the pair could once again make a move towards the 84.00 level.