USD/CAD Outlook:
The USD/CAD exchange rate is slightly positive, but likely to move sideways as it is just below its recent average and within the mid-range of its recent trading cycle.
Key drivers:
• Rate gap: The Federal Reserve's tightening stance contrasts with the Bank of Canada's recent rate cuts, generally supporting the USD.
• Risk/commodities: Rising oil prices have helped the CAD, as Canada is heavily reliant on oil exports, boosting its currency value.
• One macro factor: Recent U.S. jobless claims data indicates a resilient labor market, which typically strengthens the USD, adding pressure on the CAD.
Range:
The USD/CAD is likely to hold within its recent trading range, as it is currently trading slightly below the 90-day average and near the midpoint of its recent highs and lows.
What could change it:
• Upside risk: A stronger-than-expected U.S. GDP report could boost the USD significantly.
• Downside risk: A notable increase in Canadian retail sales could bolster the CAD, putting downward pressure on the USD/CAD rate.
