CAD/CZK Outlook:
The CAD/CZK exchange rate is likely to increase as it is currently above its recent average and near recent highs. The performance is supported by rising oil prices, which benefit the Canadian economy.
Key drivers:
• Rate gap: The Bank of Canada's cautious monetary stance contrasts with the Czech National Bank's steady interest rate, impacting the relative strength of the CAD against the CZK.
• Risk/commodities: Oil prices are at 90-day highs, significantly above their average, strengthening the CAD as Canada is a major oil exporter.
• Macroeconomic outlook: The Czech Republic's economic forecasts point to a stable CZK but with limited upward momentum against a strong commodity-linked CAD.
Range:
Expect CAD/CZK to oscillate within its recent range, leaning towards testing higher levels.
What could change it:
• Upside risk: A significant improvement in Canadian retail sales could further bolster the CAD.
• Downside risk: Renewed trade tensions or negative economic data from Canada could pressure the CAD lower.