CAD/NZD Outlook:
Bearish outlook as the rate is below its recent average and facing pressures from current market dynamics.
Key drivers:
• Rate gap: The Bank of Canada remains cautious, while the Reserve Bank of New Zealand is signaling potential interest rate cuts.
• Risk/commodities: The CAD is supported by rising oil prices, trading significantly above its three-month average, benefiting Canada’s oil export revenues.
• One macro factor: Ongoing risk aversion in the market has weakened demand for the New Zealand dollar.
Range:
Expect CAD/NZD to drift within its recent range, as pressures and conditions are mixed.
What could change it:
• Upside risk: An unexpected rebound in global risk appetite could support the NZD.
• Downside risk: A significant drop in oil prices could negatively impact the CAD, exacerbating its current weakness.