CAD/NZD Outlook:
Slightly weaker, but likely to move sideways, as the rate is below its recent average and lacks a clear driver.
Key drivers:
• Rate gap: The Bank of Canada maintains rates, while the Reserve Bank of New Zealand hints at potential cuts, adding pressure on the NZD relative to the CAD.
• Risk/commodities: Oil prices are currently above average, which typically supports the CAD, but the recent volatility may limit its impact on strengthening the loonie.
• One macro factor: Ongoing uncertainty in the New Zealand labor market following an unexpected rise in unemployment continues to weigh on the NZD.
Range:
Expect CAD/NZD to drift within the recent range, influenced by fluctuating oil prices and labor market updates.
What could change it:
• Upside risk: A significant rebound in oil prices could provide stronger support for the CAD.
• Downside risk: Continued deterioration in global risk appetite may pressure the NZD further.