Bias: The SGD/CAD pair is currently bullish-to-range-bound, being above the 90-day average and positioned in the upper half of the 3-month range.
Key drivers:
- Rate gap: The Monetary Authority of Singapore's recent policy adjustments show a more accommodative stance, while the Bank of Canada has maintained rates to support economic growth, creating a favorable rate gap for the SGD.
- Risk/commodities: The Canadian dollar is supported by rising oil prices, which have been volatile but are currently higher than their recent average, benefiting Canada's economy as a major oil exporter.
- Economic outlook: Canada's rising unemployment has raised caution, which may limit the CAD's recovery potential and contrast with Singapore's resilient economic growth projections.
Range: The SGD/CAD pair is expected to drift within its recent 3-month range as both currencies respond to upcoming economic data and external market conditions.
What could change it:
- Upside risk: A significant improvement in Canadian employment data could strengthen the CAD, pushing the pair lower.
- Downside risk: Further decreases in oil prices could weaken the CAD considerably, favoring the SGD.