Bias: Bearish-to-range-bound, positioned below the 90-day average and in the lower half of the 3-month range.
Key drivers:
- Rate gap: BoC policy remains easier after a recent cut, while the PBOC signals yuan stabilization, widening the policy gap that can pressure CAD versus CNY.
- Risk/commodities: Oil trades near 30-day highs and above the 3-month average, supporting CAD via the commodity link, but volatility keeps moves uncertain.
- Macro: January Canadian trade and employment data due, likely to drive near-term CAD moves; outcomes could swing the policy gap and risk flows across markets.
Range: Expect the CAD/CNY pair to drift within the 3-month band, with a tendency to test the lower bound as global liquidity shifts.
What could change it:
- Upside risk: A stronger oil rally or stronger Canadian data that narrows the rate gap could lift CAD/CNY, especially if risk appetite improves.
- Downside risk: Renewed trade tensions or a sharp oil retreat could push CAD lower vs CNY.