The Canadian dollar (CAD) has shown strength recently, buoyed by declining unemployment and rising oil prices. Analysts noted that unemployment in Canada fell unexpectedly from 6.9% to 6.5%, contrary to forecasts predicting an increase. The CAD's value is closely linked to oil prices, as Canada is a primary oil exporter; therefore, any upward movement in oil prices typically leads to a stronger CAD. Recently, oil increased by 1.5% to $59.84 per barrel, which is advantageous for the Canadian economy and could contribute to further appreciation of the loonie.
Market updates indicate that the CAD reached a 14-day high against the Israeli shekel (ILS), currently trading at 2.3478, which aligns closely with its three-month average. The exchange rate has demonstrated stability, oscillating within a 6.4% range from 2.2856 to 2.4318 recently. Economic indicators such as Canada’s GDP growth, which exceeded analysts' expectations at an annualized rate of 2.6% in Q3, have also helped bolster confidence in the CAD. Conversely, the Bank of Canada's recent decision to cut interest rates by 25 basis points to 2.25% raises questions about future CAD strength, indicating a potentially softer monetary stance.
On the other hand, the ILS has been appreciating, driven by declining inflation rates and improved investor sentiment. As of September 2025, Israel's inflation rate dropped to 2.5%, which may encourage the Bank of Israel to consider interest rate reductions. Additionally, the cessation of conflict in Gaza has reduced the geopolitical risk premium associated with the ILS, further supporting its strength against the USD. UBS has revised its forecasts downward for the USD/ILS exchange rate, predicting continued shekel appreciation.
Overall, the interplay between oil prices, interest rate decisions, and broader economic performance will significantly influence the CAD to ILS exchange rate trajectory. Should oil prices continue to fluctuate in a volatile range—currently trading at 62.21, down from the three-month average of 64.51—the strength of the CAD could be affected, potentially leading to shifts in the CAD/ILS rate in the medium term.
