The Canadian dollar (CAD) has recently been pressured by declining oil prices, which are critical for Canada's economy given its status as one of the world's largest oil exporters. Currently, oil prices are trading at $66.99, approximately 3.0% below the three-month average of $69.07, showcasing a significant volatility range of 20.7% from $65.32 to $78.85. Falling oil prices typically reduce demand for Canadian exports, putting downward pressure on the CAD.
Recent economic indicators have also affected the CAD. The jobless rate is anticipated to rise to 7% for August, matching a near four-year high, which analysts suggest could further diminish confidence in CAD. A notable rebound was observed on August 22, when the CAD appreciated by 0.7% against the USD due to dovish remarks from U.S. Federal Reserve Chair Jerome Powell, leading to speculation of potential interest rate cuts in the U.S. Furthermore, the removal of some retaliatory tariffs on U.S. imports by Prime Minister Mark Carney was seen as a positive development for trade and economic ties with the U.S.
Conversely, the Canadian dollar's recent performance reflects a 1.8% decrease from its three-month average against the Israeli new shekel (ILS), currently priced at 2.4333. The CAD/ILS pair has exhibited a volatile range of 9.5%, with trading patterns between 2.4185 and 2.6482.
On the other hand, the Israeli new shekel (ILS) appears to be underpinned by improved economic forecasts and geopolitical stabilization. Analysts predict continued strengthening for the shekel, with UBS revising its USD/ILS forecasts to reflect a potential move to 3.30 by the end of the quarter due to reduced geopolitical risks.
Investment in technology, particularly with Nvidia's planned AI technology park, signals robust confidence in Israel's tech sector, which is expected to create jobs and enhance economic stability. Political developments, such as Prime Minister Netanyahu's decision to delay controversial judicial reforms, have also contributed to a favorable market reaction, resulting in an appreciation of the shekel.
Both currencies are influenced by a complex interplay of factors, including commodity prices, interest rates, and broader economic sentiments. The future trajectory of the CAD and ILS will closely depend on ongoing developments in commodity markets, domestic economic indicators, and geopolitical risk assessments. Investors should remain vigilant to these factors as they navigate their foreign exchange transactions.
