CAD/NZD Outlook:
The CAD/NZD rate is slightly weaker, but likely to move sideways as it trades below its recent average and hovers near mid-range levels. Current dynamics suggest limited driving forces for significant movement.
Key drivers:
- Rate gap: The Bank of Canada has lowered interest rates recently, while the Reserve Bank of New Zealand maintains a higher rate to combat inflation, weakening support for the CAD against the NZD.
- Risk/commodities: Oil prices are at recent highs, which typically bolsters the CAD; however, volatility in crude markets creates uncertainty for the currency.
- One macro factor: The RBNZ's commitment to maintaining its hawkish stance indicates continued support for the NZD despite mixed job data, boosting confidence in the currency.
Range:
The CAD/NZD is expected to drift within its recent range, holding steady due to the absence of compelling drivers.
What could change it:
- Upside risk: A significant rise in oil prices could improve the CAD's performance against the NZD.
- Downside risk: If the Reserve Bank of New Zealand adopts a more cautious tone in future statements, it could negatively impact the NZD.
