AUD/CAD Outlook: Slightly positive, but likely to move sideways, as the rate remains elevated above its recent average without a convincing driver for a significant shift.
Key drivers:
• Rate gap: The Reserve Bank of Australia's cautious approach contrasts with a stable policy from the Bank of Canada, creating a slight edge for the AUD.
• Risk/commodities: Oil prices are at 90-day highs, boosting the CAD's appeal, while strong commodity prices lend support to the AUD, keeping both currencies closely linked.
• One macro factor: Inflation pressures in Australia continue to suggest potential rate hikes, enhancing the AUD's attractiveness amid overall economic uncertainties.
Range: The AUD/CAD rate is expected to hold near current levels, as fluctuations in commodity prices impart some stability.
What could change it:
• Upside risk: A sharp increase in commodity prices could elevate the AUD further against the CAD.
• Downside risk: Any significant drop in oil prices could weaken the CAD, potentially increasing pressure on the AUD.