CAD/ILS Outlook: Slightly positive, but likely to move sideways, as the rate is below its recent average and lacks a clear driver for change.
Key drivers:
• Rate gap: The Bank of Canada has recently lowered interest rates, while the Bank of Israel cut its rate further, narrowing the interest rate differential between the two currencies.
• Risk/commodities: Oil prices are at recent highs, which usually supports the Canadian dollar due to its strong link to oil exports.
• One macro factor: The Bank of Israel's economic projections indicate solid GDP growth, supporting the shekel's strength.
Range: The CAD/ILS is expected to drift within its recent range, lacking momentum to test extremes.
What could change it:
• Upside risk: A shift in oil prices significantly higher could boost the Canadian dollar.
• Downside risk: Any further deterioration in U.S.-Canada trade relations could weaken the CAD more.