CAD/CNY Outlook:
Slightly positive, but likely to move sideways as the rate is near its recent average and lacks a clear driver.
Key drivers:
- Rate gap: The Bank of Canada is maintaining steady interest rates, while the People's Bank of China recently aimed to stimulate the economy by reducing rates, impacting investor preference for the CAD over the CNY.
- Risk/commodities: With oil prices currently elevated, CAD is benefiting as Canada’s economy relies heavily on oil exports, supporting the loonie’s strength.
- Macro factor: Recent employment data from Canada shows a drop in unemployment, which may bolster confidence in the Canadian economy.
Range:
The CAD/CNY pair is likely to hold within its recent trading range, as recent fluctuations have been stable.
What could change it:
- Upside risk: A significant increase in oil prices could strengthen the CAD further.
- Downside risk: A deterioration in Canada’s trade relations with the U.S. could negatively impact the CAD.