CAD/CZK Outlook:
Currently, CAD/CZK is trading at 90-day highs and is significantly above its recent average. This suggests a bullish outlook, driven by strong oil prices that benefit the CAD.
Key drivers:
• Rate gap: The Bank of Canada is likely to keep rates steady, while the Czech National Bank’s rates are unchanged, narrowing the interest rate differential.
• Risk/commodities: Oil prices are notably high, boosting Canada’s economy, as it is a major oil exporter.
• One macro factor: Lower inflation in the Czech Republic may limit the CZK's strength against the CAD.
Range:
Expect CAD/CZK to hold within recent highs, but possibly test the upper end of the 3-month range.
What could change it:
• Upside risk: A significant leap in oil prices could further strengthen the CAD.
• Downside risk: A sudden pullback in oil prices could pressure the CAD and weaken this pair.