CAD/BRL Outlook: Slightly positive, but likely to move sideways, as the rate is just below its recent average and lacks a strong driver.
Key drivers:
• Rate gap: The Bank of Canada has kept interest rates steady, while the Central Bank of Brazil maintains higher rates, providing an incentive for foreign investment into BRL.
• Risk/commodities: Oil prices are currently above average, which typically supports the CAD due to Canada's status as a major oil exporter.
• Trade dynamics: Brazil's strong trade surplus enhances the BRL's position, adding stability to its value despite political uncertainty.
Range: The CAD/BRL exchange rate is likely to drift within its recent 3-month range.
What could change it:
• Upside risk: A significant rise in oil prices could bolster the CAD, improving its competitiveness against the BRL.
• Downside risk: A rate cut by the Brazilian Central Bank could weaken BRL, making it more competitive against CAD.
