CAD/USD Outlook: Slightly positive, but likely to move sideways as the rate trades just above its average and lacks a clear driver.
Key drivers:
• Rate gap: The Bank of Canada has recently cut interest rates, while expectations for U.S. Fed cuts could keep the USD under pressure.
• Risk/commodities: Oil prices have stabilized above their recent average, supporting the Canadian dollar as a major oil exporter.
• One macro factor: U.S. tariff threats have raised concerns, creating uncertainty about future trade, particularly with Canada.
Range: The CAD/USD is likely to hold steady within its recent 3-month range.
What could change it:
• Upside risk: Significant improvement in U.S. economic data could enhance demand for the USD.
• Downside risk: Further declines in oil prices or escalating trade tensions could push the CAD lower.
