CAD/CZK Outlook: Slightly positive, but likely to move sideways as the rate is near its recent average and lacks a clear driving force.
Key drivers:
• Rate gap: The Bank of Canada has reduced interest rates while the Czech National Bank is maintaining a higher rate, which could favor the koruna over the loonie.
• Risk/commodities: Oil prices are slightly above their average, but still face volatility which may pressure the Canadian dollar if they soften further.
• Economic growth: Stable economic growth forecasts for the Czech Republic support the koruna’s value, creating a favorable backdrop against the loonie.
Range: Exchange rates are likely to remain within the recent range, with minimal movement expected due to mixed signals from both currencies.
What could change it:
• Upside risk: A significant rebound in oil prices could support the Canadian dollar, improving its competitiveness.
• Downside risk: If inflation in Canada rises sharply, further rate cuts may be anticipated, exerting downward pressure on the CAD.
