CAD/AED Outlook:
Slightly positive, but likely to move sideways as the rate is above its recent average and lacks a clear driver.
Key drivers:
• Rate gap: The Bank of Canada has adopted a cautious stance, while the UAE Dirham's peg to the US Dollar maintains its stability.
• Risk/commodities: Oil prices are currently volatile and significantly above average, affecting the Canadian Dollar negatively as it is a major oil exporter; a decline in oil prices could weaken the CAD further.
• One macro factor: The recent contraction in Canada’s services sector suggests ongoing economic challenges, which may cap any significant recovery of the CAD.
Range:
Expect CAD/AED to remain stable, drifting within its recent trading band.
What could change it:
• Upside risk: A significant recovery in oil prices could strengthen the CAD.
• Downside risk: Continued weakness in Canadian economic indicators could pressure the CAD lower.