Bias: range-bound, CAD/CNY sits below its ninety-day average and near the lower end of the three-month range.
Key drivers:
- Rate gap: BoC's policy stance with a lower policy rate contrasts with ongoing PBOC stabilization, placing modest downward pressure on CAD versus CNY.
- Risk/commodities: Oil holding firm on sixty-day highs tends to underpin CAD as an oil-linked currency, countering some yuan softness.
- Macro factor: Trade policy uncertainty as U.S. tariffs curb Canadian exports; CAD under pressure from weak external demand.
Range: CAD/CNY is likely to drift within the three-month range, with a bias to hold near the lower end and occasional tests of the lower bound.
What could change it:
- Upside risk: A stronger oil market and a positive Canadian data surprise could lift the loonie against the yuan.
- Downside risk: A fresh escalation in U.S. tariffs or weaker Chinese data could push CAD/CNY toward the lower end.
