USD/XOF Outlook:
The USD/XOF rate is slightly weaker, but likely to move sideways as it currently trades just below its recent average and remains within mid-range. Without distinct drivers, a significant move in either direction is unlikely.
Key drivers:
• Rate gap: The US Federal Reserve's potential interest rate hikes could support the USD more than the Bank of Central African States' neutral stance on the XOF.
• Risk/commodities: The rise in global oil prices may bolster the dollar as a safe-haven currency, impacting demand for the XOF.
• One macro factor: The ongoing reform discussions for the CFA franc could create uncertainty, but no immediate changes are altering its value markedly.
Range:
The USD/XOF rate is expected to hold within its recent range, reflecting stability despite external pressures.
What could change it:
• Upside risk: A stronger-than-expected US GDP report could lead to a renewed strength in the USD.
• Downside risk: Any geopolitical tensions that escalate might lead to increased demand for the XOF as a stable reserve.
