CAD/ILS Outlook: Slightly weaker, but likely to move sideways, as the rate is below its recent average and within the mid-range of recent trades.
Key drivers:
• Rate gap: The Bank of Canada has cut interest rates, while the Bank of Israel has recently lowered its own rate, favoring a stronger ILS over the CAD.
• Risk/commodities: Oil prices are currently above their recent average, but given fluctuations, lower prices could pressure the CAD further.
• One macro factor: The unexpected interest rate cut by the Bank of Israel is supporting the ILS's strength, alongside positive economic forecasts.
Range: Since the CAD/ILS has traded within a stable range, it is likely to drift without testing the extremes anytime soon.
What could change it:
• Upside risk: A rebound in oil prices could strengthen the CAD against the ILS.
• Downside risk: Further declines in Canadian exports due to ongoing trade tensions may lead to CAD depreciation.