Bias: bearish-to-range-bound, as CAD sits below its 90-day average and is in the lower half of the 3-month range.
Key drivers:
• Rate gap: The Bank of Canada remains at a comparatively lower policy rate than the Bank of Israel, widening the interest-rate gap and pressuring CAD/ILS higher.
• Risk/commodities: Oil prices remain above the 3-month average and display volatility, which typically supports CAD on the oil linkage while occasional swings cap sustained gains in the near term.
• Macro factor: Upcoming Canadian trade balance and employment data in January could move CAD; solid prints would offer modest relief for CAD against the ILS but softer data would weigh on sentiment.
Range: CAD/ILS is expected to hold near the lower end of the 3-month range, with a mild drift toward the middle if oil stays supportive.
What could change it:
• Upside risk: Oil prices extend gains, continuing to support CAD against the ILS.
• Downside risk: U.S. tariffs on Canadian exports persist and weigh on CAD.
