CAD/AED Outlook: Slightly positive, but likely to move sideways, as the rate is above its recent average but lacks a clear current driver.
Key drivers:
• Rate gap: The Bank of Canada has lowered its overnight rate, which may inhibit CAD strength compared to the Central Bank of the UAE's stable policy.
• Risk/commodities: Oil prices are currently above average, which typically supports the CAD due to Canada's significant oil exports.
• One macro factor: Canadian export challenges from U.S. tariffs could limit CAD gains despite the stronger oil prices.
Range: The CAD/AED rate is likely to hold within recent levels, showing stability within its narrow range.
What could change it:
• Upside risk: A significant increase in global oil prices could boost the CAD against the AED.
• Downside risk: Further deterioration in U.S.-Canada trade relations may put downward pressure on the CAD.