AED/CAD Outlook:
Slightly weaker, but likely to move sideways, given the rate is below its recent average and near recent lows.
Key drivers:
• Rate gap: The UAE Dirham maintains a stable peg to the US Dollar, while the Bank of Canada has kept a cautious approach with its benchmark rate.
• Risk/commodities: The Canadian dollar remains pressured due to a recent fall in oil prices, which affects Canada's revenues as a major oil exporter.
• One macro factor: Canada’s economy showed no growth in November, impacting confidence in the loonie’s recovery.
Range:
The AED/CAD is expected to trade within its recent range, likely holding steady without making sharp moves.
What could change it:
• Upside risk: A significant rebound in oil prices could support the CAD, improving its outlook against the AED.
• Downside risk: Continued weakness in Canada's services sector could depress the CAD further, weakening its position against the AED.
