CAD/INR Outlook: The CAD is likely to increase, supported by its position above the recent average and recent strength in oil prices.
Key drivers:
• Rate gap: The Bank of Canada has maintained its interest rate, instilling confidence in the CAD compared to the Reserve Bank of India, which faces economic pressures.
• Risk/commodities: Rising oil prices are elevating demand for the Canadian dollar, as Canada is a major oil exporter benefiting from these gains.
• One macro factor: The recent trade agreement between Canada and China forecasts potential gains for the CAD, as it opens additional markets for Canadian exports.
Range: The CAD/INR is expected to drift upwards within the recent range, with a tendency to test the higher end as oil prices continue to rise.
What could change it:
• Upside risk: Continued increases in oil prices could bolster the CAD further.
• Downside risk: Renewed trade tensions with the U.S. could create pressure on the CAD.