CAD/AED Outlook:
The CAD/AED outlook is likely to increase, supported by its strong position above the recent average and near recent highs.
Key drivers:
• Rate gap: The Bank of Canada has maintained steady interest rates, while the UAE Dirham is pegged to the US Dollar, which stabilizes its value.
• Risk/commodities: Rising oil prices have boosted the Canadian Dollar, as Canada is a major oil exporter. Oil is currently at 7-day highs, significantly above its recent average.
• One macro factor: Ongoing geopolitical stability in the UAE continues to attract foreign investment, supporting the Dirham’s value.
Range:
The CAD/AED is expected to hold within its recent stable range, with some potential to test higher extremes.
What could change it:
• Upside risk: A further increase in oil prices could strengthen the CAD.
• Downside risk: A deterioration in trade relations between Canada and the U.S. could weaken the CAD.