Bias: CAD/USD is bullish-to-range-bound, trading above its 90-day average and in the upper half of the 3-month range, with oil and data helping support this bias.
Key drivers:
- Rate gap: BoC sits at a lower policy rate while the Fed remains higher and is expected to ease toward neutral, keeping USD relatively supported even as policy paths converge, with Canada’s growth showing resilience.
- Risk/commodities: Oil is near recent highs and volatile, and firmer oil tends to support the CAD through Canada’s export link.
- Macro factor: Canadian trade and employment data due this month may influence the CAD's path, with stronger readings offering upside for the loonie.
Range: CAD/USD is likely to hold within the recent range, with a mild drift toward the upper end.
What could change it:
- Upside risk: oil price strength and a constructive data run for Canada could push the pair higher.
- Downside risk: stronger US payrolls or a hawkish Fed outlook lifting the USD.
