CAD/SGD Outlook: Slightly weaker, but likely to move sideways as the rate trades just below its recent average and is positioned within a stable mid-range.
Key drivers:
• Rate gap: The Bank of Canada's recent rate cut signals a more accommodative monetary policy compared to the Monetary Authority of Singapore, which has adopted a more stable stance.
• Risk/commodities: Oil prices are currently near recent highs, supporting the Canadian dollar somewhat, but fluctuations can still pressure it due to the variable nature of global demand.
• One macro factor: Heightened trade policy uncertainty, particularly related to U.S. tariffs on Canadian goods, has negatively impacted the Canadian dollar's performance.
Range: CAD/SGD is likely to hold within its recent 3-month range as external factors influence movement but lack strong directional drivers.
What could change it:
• Upside risk: A surprise decision from the Bank of Canada to raise rates could strengthen the CAD quickly.
• Downside risk: Continued deterioration in U.S.-Canada trade relations could further weaken the CAD against the SGD.
