CAD/CNY Outlook:
The CAD/CNY exchange rate is currently slightly below its recent average and has recently experienced stability within its typical range. However, the upward trend in oil prices is providing tentative support to the Canadian dollar.
Key drivers:
• Rate gap: The Bank of Canada’s proactive measures may maintain a competitive edge over the People’s Bank of China's potential easing.
• Risk/commodities: Oil prices are nearing 90-day highs, bolstering the CAD given Canada’s status as a major oil exporter.
• One macro factor: China's economy is beginning to show signs of recovery, with government stimulus fueling market confidence.
Range:
Expect the CAD/CNY rate to drift within its recent stable range, testing both the upper and lower extremes.
What could change it:
• Upside risk: A further substantial rise in oil prices could strengthen CAD significantly.
• Downside risk: Increased USD demand during geopolitical tensions may negatively impact the CAD.