The Canadian dollar (CAD) has recently come under pressure, primarily driven by a disappointing inflation report and deteriorating employment figures, which have heightened expectations for a potential rate cut by the Bank of Canada (BoC). Analysts note that a 40,800 job loss in July increased the likelihood of a rate cut for the upcoming September meeting to 36%, marking a notable shift from just 17% earlier in the month. Such developments suggest a greater risk of CAD depreciation if the BoC opts for looser monetary policy.
Furthermore, the CAD's performance is closely tied to oil prices, as Canada is a significant oil exporter. The latest data indicates that oil prices have reached 60-day lows near $65.79, significantly below the 3-month average of $68.49. Analysts have observed increased volatility in oil prices, with a 25.6% range recently seen, further complicating the outlook for the CAD. A decline in oil prices typically leads to a weakening of the loonie, especially given that the CAD to AED exchange rate is currently at 90-day lows around 2.6483—1.1% beneath its 3-month average of 2.677.
On the other hand, the UAE dirham (AED), which is pegged to the U.S. dollar, has been influenced by global factors such as U.S. tariffs and strengthening of the dollar. Recent reports highlight a downturn in UAE markets due to U.S. tariff developments, which has created uncertainty for investors. Additionally, the dirham’s value may be bolstered by innovations such as the plan to launch a dirham-pegged stablecoin, which could enhance its presence in international markets.
Overall, the exchange rate forecasts for CAD to AED indicate that the loonie faces considerable headwinds, driven by domestic economic challenges and external price pressures from oil markets. Moving forward, traders should closely monitor U.S. inflation data and oil price trends as key indicators influencing the CAD's trajectory relative to the AED.
