Bias: CAD/CZK is bullish-to-range-bound, because the pair sits above its 90-day average and near the upper end of the last three months' range.
Key drivers:
- Rate gap: The Bank of Canada cut rates, while the Czech National Bank stays tighter, widening the gap and keeping CZK relatively resilient versus CAD.
- Risk/commodities: Oil holds firm with volatility; a stronger oil complex tends to lift CAD via Canada’s energy link, though moves can be choppier.
- Macro factor: CNB’s cautious stance, with inflation near target and solid growth, helps keep the koruna firm and limits CAD outperformance.
Range: Likely to drift within the recent range for now, with a tilt toward testing the upper end if oil stays firm.
What could change it:
- Upside risk: oil prices extend gains and global growth surprises boost risk appetite, which could push CAD weaker and move the pair toward the upper end.
- Downside risk: a renewed wave of protectionism or softer Canadian data weigh on CAD, pushing the pair toward the lower end.
