CAD/CNY Outlook:
The CAD/CNY exchange rate is slightly weaker but likely to move sideways. The rate is near its recent average and remains stable within the recent trading range, lacking strong directional drivers.
Key drivers:
- Rate gap: The Bank of Canada has cut interest rates recently, impacting the Canadian dollar, while the People’s Bank of China focuses on stabilizing the yuan.
- Risk/commodities: Rising oil prices have buoyed the Canadian dollar, as Canada remains a major oil exporter, benefiting from increased oil revenue.
- One macro factor: The Chinese government has emphasized maintaining yuan stability, signaling potential actions to prevent sharp fluctuations.
Range:
The CAD/CNY rate is expected to hold steady within the established range, with minor fluctuations.
What could change it:
- Upside risk: A significant rise in oil prices could enhance the CAD’s strength.
- Downside risk: Any escalation of trade tensions with the U.S. could negatively impact the CAD.