CAD/CZK Outlook: Slightly weaker, but likely to move sideways as the rate is below its recent average and lacks a clear driver.
Key drivers:
• Rate gap: The Bank of Canada has lowered rates while the Czech National Bank has maintained a higher rate, which supports the koruna against the loonie.
• Risk/commodities: Oil prices are currently above average, which may provide some support for the CAD, but recent volatility suggests uncertain impacts on its value.
• One macro factor: The Czech economy is growing steadily, which strengthens the koruna as domestic demand rises.
Range: The CAD/CZK is likely to drift within its recent stable range of approximately 1.8%, without testing extremes anytime soon.
What could change it:
• Upside risk: A significant rebound in oil prices could bolster the CAD against the CZK.
• Downside risk: Further depreciation in Canadian exports or worsening trade relations with the U.S. could weigh on the CAD.
