The CAD/ZAR exchange rate currently shows a bearish bias, evident as the Canadian dollar is trading near recent lows. Key drivers include the interest rate differential, with Canada maintaining a policy rate of 2.25% while South Africa's base rate was recently lowered to 6.75%, which may weaken the CAD relative to the ZAR. Moreover, weak oil prices, now 3.3% below their three-month average, directly affect the CAD, as Canada is a major oil exporter.
The expected near-term trading range for CAD/ZAR suggests continued pressure around current levels, likely fluctuating sideways over the next few months. Upside risks could arise if Canada's upcoming retail sales data show significant growth, potentially reviving confidence in the CAD. Conversely, a deterioration in global risk sentiment or further declines in oil prices could provide additional downward pressure on the CAD, leading to further weakening against the ZAR.
