CAD/AUD Outlook: The outlook for CAD/AUD is slightly weaker but likely to move sideways, as the rate is below its recent average and near recent lows without a clear driver pushing it significantly lower.
Key drivers:
• Rate gap: The Bank of Canada has recently signaled a steady approach to interest rates, while the Reserve Bank of Australia is considering potential hikes due to rising inflation risks.
• Risk/commodities: Oil prices have shown volatility and are slightly above their 3-month average, but any sustained decline could negatively impact the Canadian dollar.
• One macro factor: Australia’s job market continues to outperform expectations, with falling unemployment rates supporting demand for the Australian dollar.
Range: CAD/AUD is expected to hold within its recent range, as the current position is stable but lacks momentum for a breakout.
What could change it:
• Upside risk: A significant rise in oil prices could enhance the Canadian dollar's appeal as a commodity currency.
• Downside risk: Continued weakness in demand for Australian exports from China may pressure the AUD, impacting the CAD/AUD rate.
