The recent commodity price meltdown and especially the crude's struggle causing the reaction function of firms in the Canadian oil and gas sector proposes that business investment may be even more of a drag on 2016 growth than previously thought.

The Business Outlook Survey by Bank of Canada has been lackluster in Q4 2015 and has amplified this theme, as investment intentions moved to their lowest readings since the 2009 recession. This has prompted the market to price in the increased probability of a rate cut at the January 20 meeting.

Regardless of whether or not the Bank of Canada cuts rates, we believe that the uptrend in USD/CAD will persist. The 1.5000 level now serves as an anchor for the market from a behavioural/sentiment perspective.

Oil prices have a significant impact on the Canadian economy, with price moves affecting variables such as the terms of trade, some components of CPI inflation, incomes, housing and of course the Canadian dollar.

Although the oil and gas sector accounts for a relatively small portion of GDP at approximately 6.4%, it has important ramifications for business investment via a contribution of about 25%-30% to total business investment based on 2014 and 2015 figures.

Since late December, we have been fielding a number of questions from clients pertaining to the impact that the most recent selloff in oil will have on investment and growth as 2016 gets underway.

As such, we discuss some key considerations that relate to business investment herein, assessing risks ahead of the Bank of Canada rate decision and Monetary Policy Report.

Keeping all these factors in mind, good to buy (1%) OTM call while writing (1%) ITM call with shorter expiries, this bear call spread option trading strategy is recommended when the CADJPY spot FX is anticipated to slump moderately in the near term.

The bear call spread option strategy is also known as the bear call credit spread as a credit is received upon entering the trade.