The Canadian dollar (CAD) has shown some vulnerability recently despite rising oil prices. Analysts note that the CAD has struggled to gain traction, with a notable decline against most peers. This trend comes even as crude prices have hit 90-day highs near $78.85, substantially above the 3-month average of $67.33. As Canada is a major oil exporter, the loonie typically benefits from increases in oil prices, yet its current performance reflects a complex interplay of domestic and international factors.
The Bank of Canada's decision to pause interest rate cuts has provided some support to the CAD, maintaining the benchmark rate at 2.75%. However, concerns regarding ongoing trade tensions with the United States, including the imposition of 25% tariffs on Canadian steel and aluminum, have injected uncertainty and limited the CAD's upside potential.
Market analysts have also pointed out that recent political turmoil in Canada, following Prime Minister Justin Trudeau's resignation, may weigh on investor sentiment. The changes in political leadership and their implications for economic policies add another layer of complexity to the CAD's forecast.
Meanwhile, the Israeli shekel (ILS) has faced significant challenges, impacted severely by recent conflict in the Middle East. The shekel plummeted against the dollar following escalations and subsequent foreign exchange interventions by the Bank of Israel aimed at stabilizing the market. The ongoing volatility in ILS, exacerbated by a 17% reciprocal tariff from the U.S., raises questions about its near-term stability amidst geopolitical tensions.
Currently, the CAD to ILS exchange rate sits at about 2.5501, approximately 1.8% lower than its 3-month average of 2.5957. Despite recent fluctuations, the CAD has maintained a relatively stable trading range near its current level.
Moving forward, the trajectory of the CAD against the ILS will likely depend on oil price trends, the Bank of Canada’s monetary policy responses, and the broader implications of geopolitical developments affecting the ILS. The situation calls for careful monitoring, as shifts in these variables could have pronounced effects on currency valuations.