CAD/CNY Outlook:
Slightly positive, but likely to move sideways, as the rate is near its recent average and lacks a clear driver.
Key drivers:
• Rate gap: The Bank of Canada is maintaining a cautious monetary policy, which contrasts with the People's Bank of China's efforts to stimulate credit with lower interest rates.
• Risk/commodities: Oil prices are currently above their recent average, suggesting potential support for the Canadian dollar, which is closely tied to commodity performance.
• Macro factor: Recent initiatives in China to manage the yuan's appreciation reflect a strategic approach to support its exporters amid a more flexible global trade environment.
Range:
The CAD/CNY exchange rate is likely to hold within its recent 3-month range, showing stability without significant shifts.
What could change it:
• Upside risk: A sharp increase in oil prices could boost the Canadian dollar and strengthen CAD against CNY.
• Downside risk: Continued softness in oil prices might add pressure, weakening the CAD relative to the CNY.
