The Canadian dollar (CAD) has shown a mixed performance against the Israeli shekel (ILS) recently, largely influenced by fluctuating oil prices, trade tensions, and domestic political changes. As of now, the CAD/ILS exchange rate sits at 2.4599, which is 4.7% below its three-month average of 2.5803, indicating recent weakness in the loonie. This exchange rate has experienced a notable volatility, trading within a range of 10.4% from 2.4580 to 2.7125.
Analysts attribute some of the CAD's relative strength to its correlation with the US dollar, which has remained robust. However, the lack of support from dwindling oil prices has created limits on the currency's gains. As Canada's economy is heavily reliant on oil exports, any downturn in oil prices can negatively impact the CAD. Recently, oil markets have exhibited signs of recovery, trading at $68.80, which is 3.2% above its three-month average of $66.66. This situation should theoretically lend support to the CAD, providing a counterbalance to other negative factors.
The outlook for the CAD remains cautious due to significant domestic developments. With Canada facing political leadership changes following the resignation of Prime Minister Justin Trudeau and newly appointed Mark Carney, political stability will be crucial for economic confidence. Trade tensions with the U.S., which included tariffs on Canadian steel and aluminum, have also created an environment of uncertainty that hampers expectations for the loonie's performance. Analysts note that despite recent rallies linked to the Bank of Canada's pause on interest rate cuts, the potential for upward momentum may be limited due to ongoing tariff threats.
Regarding the ILS, it has been pressured by the recent geopolitical situation in the Middle East, which has seen the Israeli shekel decline significantly amid escalating conflicts. The Bank of Israel's intervention through foreign exchange sales marks a critical response to maintain stability in these turbulent times.
In summary, while the CAD benefits from some supportive factors like oil price recoveries, domestic political instability and international trade tensions pose challenges. The ILS, meanwhile, faces significant headwinds from geopolitical unrest. Thus, those engaged in CAD/ILS transactions should remain vigilant and aware of these evolving dynamics.