CAD/AED Outlook: The CAD/AED exchange rate is slightly positive but likely to move sideways, as it is above its recent average yet lacks a clear driver for further gains.
Key drivers:
• Rate gap: The Bank of Canada has maintained its interest rates, reinforcing confidence in the CAD, while the UAE maintains stable policy.
• Risk/commodities: With oil prices at multi-month highs, the CAD benefits from higher revenues as Canada is a major oil exporter, fostering demand for the currency.
• One macro factor: Canada’s recent trade agreement with China to reduce tariffs on canola products may enhance economic prospects for the CAD.
Range: Expect the CAD/AED to likely hold within its recent 3-month range, showing stability from 2.6018 to 2.7227.
What could change it:
• Upside risk: A significant rise in oil prices could propel the CAD higher against the AED.
• Downside risk: Any adverse developments in U.S.-Canada trade relations could negatively impact the CAD.