Bias: The CAD/NZD pair is currently bearish-to-range-bound, as it is below the 90-day average and in the lower half of the 3-month range.
Key drivers:
- Rate gap: The Bank of Canada's recent rate cut to 2.25% contrasts with the Reserve Bank of New Zealand's easing cycle, which has lowered rates to 2.75%, putting pressure on the NZD.
- Risk/commodities: Oil prices are currently above their 3-month average, benefitting the CAD as higher oil prices generally support the Canadian economy, but volatility remains a concern.
- U.S. trade tensions: Tariffs on both Canadian and New Zealand exports are creating uncertainties for both currencies, with potential impacts on economic growth and inflation.
Range: The CAD/NZD pair is likely to remain within its recent stable range, drifting without testing the extremes immediately.
What could change it:
- Upside risk: A significant rebound in oil prices could strengthen the CAD, improving its position against the NZD.
- Downside risk: Continued global trade tensions and a weaker economic outlook for New Zealand could further pressure the NZD, impacting the CAD/NZD exchange rate.