CAD/AUD Outlook: Bearish, as the CAD currently sits below its 90-day average and is near recent lows, weighed down by trade tensions with the U.S. and pressured oil prices.
Key drivers:
• Rate gap: The Bank of Canada has maintained its interest rates, while the Reserve Bank of Australia is considering potential hikes, which could enhance the AUD's appeal.
• Risk/commodities: Oil prices have surged to near 90-day highs, but their recent volatility may impact Canadian export revenues, weakening the CAD.
• Macro factor: Trade tensions with the U.S. continue to create uncertainty, promoting downward pressure on the CAD and limiting its recovery.
Range: The CAD/AUD pair is likely to drift within its current range, as the loonie struggles to gain traction amidst external pressures.
What could change it:
• Upside risk: A resolution of U.S.-Canada trade issues could strengthen the CAD.
• Downside risk: Continued declines in oil prices may further weaken the CAD against the AUD.