NZD/CAD Outlook: Slightly positive, but likely to move sideways, as the rate is above its recent average but lacks a clear driving force.
Key drivers:
• Rate gap: The Reserve Bank of New Zealand is showing hawkish signs, while the Bank of Canada maintains a stable interest rate, creating a buoyed outlook for the NZD against the CAD.
• Risk/commodities: Oil prices are trading at 90-day highs, which is supportive of the CAD, as higher oil revenues strengthen its appeal in the market.
• One macro factor: New Zealand’s consumer inflation has surged past the Reserve Bank's target, indicating potential future tightening which could lend support to the NZD.
Range: The NZD/CAD is likely to drift within its recent 3-month range, rather than testing extremes.
What could change it:
• Upside risk: Continued strong economic indicators from New Zealand could shift the outlook more positively for the NZD.
• Downside risk: A significant drop in oil prices could weaken the CAD, affecting the NZD/CAD rate negatively.