Bias: The outlook for CAD/TWD is bullish-to-range-bound, as the current level is above the 90-day average and within the upper half of the recent 3-month range.
Key drivers:
• Rate gap: The Bank of Canada has lowered its overnight rate to support growth, which may weaken the CAD relative to TWD, while Taiwan's central bank maintains a non-intervention policy, potentially supporting the TWD.
• Risk/commodities: Oil prices are currently above average, which tends to bolster the CAD due to Canada’s status as a major oil exporter.
• Macro factor: Taiwan's strengthening of regulatory measures for interest rate swaps indicates a desire for financial stability, which could help support the TWD.
Range: The CAD/TWD pair is likely to consolidate in its current range, with moves potentially testing the upper limits but maintaining a stable trend overall.
What could change it:
• Upside risk: A sustained increase in oil prices could further strengthen the CAD.
• Downside risk: Continued increases in Canadian unemployment may weigh on the CAD, leading to further depreciation against the TWD.
