CAD/AED Outlook:
The CAD/AED is slightly positive but likely to move sideways since it is above its recent average and trading near recent highs without a clear driving factor.
Key drivers:
• Rate gap: The Bank of Canada has cut interest rates, while the UAE Central Bank maintains a steady base rate, which may favor the dirham over the loonie.
• Risk/commodities: Oil prices are currently higher than average, which generally supports a stronger CAD, but volatility may lead to uncertainty in the currency’s performance.
• One macro factor: Ongoing trade tensions with the U.S. are impacting confidence in the Canadian economy, contributing to potential CAD weakness.
Range:
Expect the CAD/AED to hold steady within the recent range, given the current market dynamics.
What could change it:
• Upside risk: A significant rise in oil prices could strengthen the CAD further.
• Downside risk: Further deterioration in trade relations with the U.S. could exert downward pressure on the CAD.
