Bias: The CAD/THB exchange rate is bearish-to-range-bound, positioned below the 90-day average and in the lower half of the 3-month range.
Key drivers:
- Rate gap: The Bank of Canada has lowered interest rates, which may weaken the CAD compared to the Thai Baht amid the Bank of Thailand’s recent rate cut aimed at stimulating growth.
- Risk/commodities: Recent volatility in oil prices, currently above average, supports some strength for the CAD, a currency closely tied to oil exports.
- One macro factor: Thailand’s economic growth is projected to remain below potential, indicating ongoing challenges that could weigh on the THB.
Range: The CAD/THB pair is likely to hold within its recent range, with limited movement expected in the short term.
What could change it:
- Upside risk: A sustained rise in oil prices might enhance CAD strength.
- Downside risk: Continued increases in Canadian unemployment could trigger further CAD weakness.