CAD/CNY Outlook: Slightly positive, but likely to move sideways, as the rate is hovering near its recent average with mixed supporting factors.
Key drivers:
• Rate gap: The Bank of Canada recently cut rates while the People's Bank of China is working to stabilize the yuan, impacting their respective currencies differently.
• Risk/commodities: Oil prices are currently above their 3-month average, which could provide some support for the Canadian dollar as it benefits from increased revenues linked to oil exports.
• One macro factor: The Chinese yuan has come under slight pressure recently against the U.S. dollar, which may limit the upward movement of CAD/CNY.
Range: The CAD/CNY pair is expected to hold within its recent range, as both currencies exhibit stabilization tendencies.
What could change it:
• Upside risk: Strengthening oil prices or improved Canadian economic indicators could boost the CAD.
• Downside risk: Continued weakness in the yuan or escalating trade tensions could weigh on the rate.
