Bias: The CAD/PHP is currently bullish-to-range-bound, trading above the 90-day average and within the upper half of the 3-month range.
Key drivers:
- Rate gap: The Bank of Canada's recent rate cut to 2.25% contrasts with expectations for future rate cuts by the Bangko Sentral ng Pilipinas, which could support the CAD against the PHP.
- Risk/commodities: With oil prices trading higher than their 3-month average, the Canadian dollar may strengthen, given Canada's status as a major oil exporter.
- One macro factor: Weak growth prospects for the Philippines and anticipated monetary easing by the BSP may place additional downward pressure on the peso.
Range: The CAD/PHP is likely to hold within its recent range, potentially drifting higher if oil prices remain strong.
What could change it:
- Upside risk: A significant rise in oil prices could boost the CAD further.
- Downside risk: Unexpected negative data from Canada or continued weakness in the Philippine economy could dampen the CAD's performance.