AUD/CAD Outlook:
Slightly positive, but likely to move sideways, as the rate is above its recent average but lacks a clear driver.
Key drivers:
• Rate gap: The Reserve Bank of Australia has raised interest rates to combat inflation, while the Bank of Canada maintains a cautious stance with steady rates.
• Risk/commodities: Recent volatility in oil prices, which are currently 5.3% above their 3-month average, could impact the CAD as a major oil exporter.
• One macro factor: Strong CPI data from Australia has increased expectations for further rate hikes, boosting the AUD's appeal.
Range:
Expect the AUD/CAD to hold within its recent range, drifting sideways as both currencies experience mixed influences.
What could change it:
• Upside risk: A further surge in Australian commodity demand could strengthen the AUD.
• Downside risk: Escalating US-Canada trade tensions could pressure the CAD and weight down the AUD/CAD pair.