CAD/SGD Outlook:
The CAD/SGD rate is likely to decrease as it is currently positioned near recent lows and slightly below its 90-day average. The demand for CAD is under pressure due to stalling oil prices.
Key drivers:
- Rate gap: The Bank of Canada's recent decision to cut interest rates contrasts with the Monetary Authority of Singapore's stable monetary policy, impacting the CAD's appeal against the SGD.
- Risk/commodities: Oil prices are currently above their recent average, but with significant volatility. Since Canada heavily relies on oil exports, fluctuating prices negatively affect CAD demand.
- Macro factor: Recent trade tensions with the U.S. have placed additional pressure on the Canadian economy, further weakening the CAD outlook.
Range:
Expect the CAD/SGD exchange rate to drift within its recent range as both currencies react to economic developments.
What could change it:
- Upside risk: A significant rebound in oil prices could enhance demand for CAD.
- Downside risk: Continued trade tensions and further interest rate cuts from the Bank of Canada could lead to additional CAD weakness.