Rate differentials · BoC vs BoJ · priced as of 12 November 2026
CAD/JPY interest rate differential: BoC vs BoJ
As of 12 November 2026, the CAD/JPY interest rate differential is +125 bp: the BoC's overnight rate at 2.50% against the BoJ's policy rate at 1.25%, in favour of the Canadian dollar. Markets price the gap at +120 bp in six months and +125 bp in twelve.
Over the next six months, markets price the gap to move −5 bp over six months, towards the yen. That six-month gap has moved +11 bp in a month.
The rate spread, now and priced ahead
| BoC (CAD) | BoJ (JPY) | Gap | |
|---|---|---|---|
| Policy rate now | 2.50% | 1.25% | +125 bp |
| Priced in 6 months | 2.91% | 1.71% | +120 bp |
| Priced in 12 months | 3.16% | 1.91% | +125 bp |
| 6-month gap a month ago | 2.75% | 1.66% | +108 bp |
The gap is CAD minus JPY, in basis points (100 bp is one percentage point). Six and twelve months out is the rate implied after each bank's last meeting on or before that date. Market pricing, not a forecast. Each bank's meeting-by-meeting odds: BoC · BoJ.
The carry on CAD/JPY
The Canadian dollar: the Bank of Canada pays 2.50% against 1.25%, a gap of +125 bp. Holding the higher-yielding currency against the lower earns roughly that gap a year before costs, which is what the carry trade collects; a move in the exchange rate can outweigh it.
How the gap feeds the exchange rate, and when it does not: rate differentials explained and the carry trade explained.
Questions
What is the CAD/JPY interest rate differential?
As of 12 November 2026, the CAD/JPY interest rate differential is +125 bp: the BoC's overnight rate at 2.50% against the BoJ's policy rate at 1.25%, in favour of the Canadian dollar. Markets price the gap at +120 bp in six months and +125 bp in twelve.
Is the BoC–BoJ gap priced to widen or narrow?
Markets price the gap to move −5 bp over six months, towards the yen, from +125 bp now to +120 bp. A month ago (13 October) the same six-month gap was priced at +108 bp, so it has moved +11 bp since. That is market pricing, not a forecast.
Which side of CAD/JPY has the carry?
The Canadian dollar: the Bank of Canada pays 2.50% against 1.25%, a gap of +125 bp. Holding the higher-yielding currency against the lower earns roughly that gap a year before costs, which is what the carry trade collects; a move in the exchange rate can outweigh it.
Where does this pricing come from?
Each bank's priced path comes from the market instrument behind it: Exchange-traded futures, WatchTower model for BoC, Exchange-traded futures, WatchTower model for BoJ. The rate six or twelve months out is the one implied after the last meeting on or before that date. The month-ago figure is from our daily snapshot of the same curves.
More on CAD/JPY: CAD/JPY analysis · CAD/JPY retail sentiment · CAD/JPY seasonality · Canadian Dollar outlook · Canadian Dollar COT positioning · BoC rate expectations · Canadian economic surprises · Japanese Yen outlook · Japanese Yen COT positioning · BoJ rate expectations · Japanese economic surprises
Other rate differentials: USD/JPY +275 bp · USD/CAD +150 bp · EUR/JPY +125 bp · EUR/CAD 0 bp · GBP/JPY +275 bp · GBP/CAD +150 bp · AUD/JPY +360 bp · AUD/CAD +235 bp · NZD/JPY +150 bp · CHF/JPY −125 bp · all 28
In WatchTower Terminal, the Rate spread panel draws the CAD/JPY gap against the price. Nothing here is financial advice.