CAD/NZD Outlook:
Bearish, as the rate is below its recent average and near recent lows, influenced by Canadian geopolitical tensions.
Key drivers:
- Rate gap: The Bank of Canada has held its benchmark rate steady while the Reserve Bank of New Zealand is expected to cut rates, widening the differential to the NZD's advantage.
- Risk/commodities: Though oil prices are above average, recent volatility and a downward trend may undermine the strength of the CAD, impacting its export revenues.
- Macro factor: Escalating trade tensions between the U.S. and Canada are pressuring the CAD, with added uncertainty affecting overall market confidence.
Range:
Movement is likely to drift within the recent range, maintaining a modest level of volatility.
What could change it:
- Upside risk: A significant rise in oil prices could strengthen the CAD, providing support in its trade outlook.
- Downside risk: Further deterioration in U.S.-Canada trade relations could cause additional CAD weakness.
