SGD/CAD Outlook:
Slightly positive, but likely to move sideways, as the rate is near the recent average and mixed signals persist.
Key drivers:
• Rate gap: The Monetary Authority of Singapore is taking an accommodative approach while the Bank of Canada maintains a cautious stance, which supports the strength of the SGD against the CAD.
• Risk/commodities: Oil is trading above its recent average, but recent volatility could keep CAD under pressure, as fluctuating crude prices are essential for the Canadian economy.
• One macro factor: Singapore experienced stronger-than-expected economic growth in Q4 2024, which lends some strength to the SGD amid trade concerns.
Range:
Expect the SGD/CAD rate to hold within the recent range as both economies grapple with various pressures and underlying strengths.
What could change it:
• Upside risk: A significant increase in oil prices could support the CAD more strongly.
• Downside risk: Continued weakness in Canadian economic indicators, especially in the services sector, could drag the CAD lower.
