CAD/SGD Outlook: Slightly positive, but likely to move sideways as the rate is just below its recent average and near recent highs without a strong driver in either direction.
Key drivers:
• Rate gap: The Bank of Canada has recently cut interest rates, which could weigh on the Canadian dollar compared to Singapore's stable monetary policy.
• Risk/commodities: Oil prices are currently above the three-month average, supporting the Canadian economy and the CAD, although volatility remains a concern.
• One macro factor: Singapore's core inflation forecast is projected to be lower, which may sustain a more accommodative approach in monetary policy by the Monetary Authority of Singapore.
Range: The CAD/SGD is likely to drift within its recent trading range, given the current conditions.
What could change it:
• Upside risk: A rebound in global oil prices could strengthen the CAD significantly.
• Downside risk: Continued trade tensions and further rate cuts from the Bank of Canada may weaken the CAD against the SGD.
