CAD/HKD Outlook:
Slightly positive, but likely to move sideways, as the rate is above its recent average but lacks a clear driver.
Key drivers:
• Rate gap: The Bank of Canada has kept interest rates stable, while the Hong Kong Monetary Authority's interventions to maintain the peg to the US dollar influence HKD stability.
• Risk/commodities: Rising oil prices are supporting the CAD, which is commodity-linked, as Canada benefits from increased oil revenues.
• One macro factor: Ongoing trade tensions between Canada and the U.S. may weigh on CAD performance, potentially impacting confidence and trade volumes.
Range:
Expect the CAD/HKD to hold within its recent range, with potential slight fluctuations.
What could change it:
• Upside risk: Stronger-than-expected economic data from Canada could boost the CAD further.
• Downside risk: A sharp decline in oil prices would pressure the CAD, leading to downward adjustments in the exchange rate.
