CAD/CNY Outlook:
Slightly positive, but likely to move sideways, as the pair is trading above its recent average without a clear driver.
Key drivers:
- Rate gap: The Bank of Canada has maintained a cautious stance, while the People's Bank of China has recently lowered interest rates to stimulate growth, supporting the CNY against risks of depreciation.
- Risk/commodities: Oil prices are trending significantly higher, which typically benefits the CAD due to its role as a major oil exporter, yet the sustained effect is uncertain.
- One macro factor: Recent reports indicate that China's economy is growing stronger than expected, aided by government stimulus, which may bolster the CNY's stability.
Range:
The CAD/CNY is expected to drift within its recent range, showing stable performance with potential fluctuations.
What could change it:
- Upside risk: A significant rise in oil prices could provide additional support for the CAD.
- Downside risk: Any unexpected deterioration in economic conditions in Canada could pressure the CAD lower.
