CAD/CNY Outlook:
Slightly weaker, but likely to move sideways as the CAD is currently trading just below its recent average and within its stable range. The ongoing volatility in oil prices is putting pressure on the ‘Loonie’.
Key drivers:
• Rate gap: The Bank of Canada’s cautious monetary policy is struggling against the more aggressive Federal Reserve, which adds pressure on the CAD.
• Risk/commodities: Recently, oil prices have surged significantly, leading to potential volatility for CAD as they are a key export commodity for Canada.
• One macro factor: China’s economy is showing signs of recovery, with growth stronger than anticipated, which supports the CNY.
Range:
Expect the CAD/CNY exchange rate to hold within its recent range, facing limited movement as external factors create mixed signals.
What could change it:
• Upside risk: A substantial increase in oil prices could boost the CAD significantly.
• Downside risk: A sharp escalation in trade tensions with the U.S. could further pressure the CAD.
