CAD/CNY Outlook:
The CAD/CNY exchange rate is likely to decrease as it currently trades near its recent lows and is pressured by falling oil prices. The Canadian dollar is close to its 90-day average, but ongoing commodity price volatility contributes to uncertainty.
Key drivers:
- Rate gap: The Bank of Canada's cautious monetary policy contrasts with China’s focus on maintaining yuan stability, widening the interest rate gap.
- Risk/commodities: With oil prices recently at high levels, a downturn could weaken the CAD, impacting its performance against the CNY.
- One macro factor: The International Monetary Fund’s projections indicate a recovery in China's economy, supporting the yuan amid international challenges.
Range:
Expect the CAD/CNY exchange rate to test its recent lows as it fluctuates within its 3-month range.
What could change it:
- Upside risk: A significant rebound in oil prices could improve the Canadian dollar's performance.
- Downside risk: Increased trade tensions with the U.S. could further depress the CAD, moving it lower against the yuan.