CAD/AED Outlook:
Slightly positive, but likely to move sideways due to the CAD trading above its recent average and lacking a clear driver for significant movement.
Key drivers:
• Rate gap: The Bank of Canada’s cautious stance contrasts with the fixed peg of the UAE Dirham to the US Dollar, contributing to CAD's position.
• Risk/commodities: While oil prices have recently gained, they remain volatile and could create uncertainty for the CAD as a commodity-linked currency.
• One macro factor: Escalating tensions in trade relations between the U.S. and Canada may weigh on the CAD, creating headwinds for its performance.
Range:
Expect the CAD/AED to hold within its recent range, with potential for minor fluctuations but lacking momentum for extreme moves.
What could change it:
• A significant rise in oil prices could strengthen the Canadian dollar.
• Further deterioration in US-Canada relations could pressure the CAD lower.
