USD/CAD Outlook:
Slightly weaker, but likely to move sideways, as the rate is below its recent average and in the lower end of its 3-month range.
Key drivers:
• Rate gap: The Federal Reserve has held rates steady, while the Bank of Canada maintains a cautious stance, leaving rates relatively closer together.
• Risk/commodities: Oil prices have risen sharply, remaining above their recent average, which supports the Canadian dollar due to Canada's status as a major oil exporter.
• Upcoming economic indicators: Key data releases in Canada, particularly around employment and inflation, could impact the CAD's strength in the near term.
Range:
Expect movement to hold steady, with potential fluctuations within the recent range.
What could change it:
• Upside risk: A stronger-than-expected US payroll report could boost the USD.
• Downside risk: A decline in oil prices could weaken the CAD, adding downward pressure on the USD/CAD exchange rate.
