CAD/CZK Outlook:
The CAD/CZK exchange rate is currently near its recent average and stable within its 3-month range, indicating a likely movement sideways. Although recent shifts in oil prices could affect the CAD positively, there is no strong current driver pushing the exchange rate in either direction.
Key drivers:
• Rate gap: The Bank of Canada has adopted a cautious monetary policy, contrasting the Czech National Bank's stable interest rate, which supports the CZK.
• Risk/commodities: Oil prices have surged significantly, currently at a high, which typically strengthens the CAD over time as Canada is a major oil exporter.
• One macro factor: With easing inflationary pressures in the Czech Republic, the CNB's steady stance fosters confidence in the Koruna.
Range:
Expect the CAD/CZK rate to remain stable and possibly drift within its established trading range.
What could change it:
• Upside risk: Any unexpected rise in oil prices could enhance the CAD's strength.
• Downside risk: A worsening of trade tensions or further monetary policy divergence could weaken the CAD against the CZK.