NZD/CAD Outlook:
The New Zealand dollar (NZD) is currently trading above its recent average and is near the higher end of its 3-month range, suggesting a slightly positive outlook. However, lack of strong directional drivers may keep it fluctuating.
Key drivers:
• Rate gap: The Reserve Bank of New Zealand maintains a hawkish stance with a higher cash rate, while the Bank of Canada has cut its rate, impacting the NZD more positively against the CAD.
• Risk/commodities: Rising oil prices are bolstering the Canadian dollar, influencing the exchange rate as oil remains a key export for Canada.
• One macro factor: Mixed employment data in New Zealand is adding uncertainty, with a slight increase in the unemployment rate indicating softer labor market conditions.
Range:
The NZD/CAD is expected to likely drift within its recent range due to the mixed signals from both currencies.
What could change it:
• Upside risk: A significant improvement in New Zealand's trade figures could boost the NZD.
• Downside risk: A rise in Canadian consumer spending data could strengthen the CAD against the NZD.