CAD/CZK Outlook:
Slightly positive, but likely to move sideways as the CAD trades just above its recent average but lacks a clear driver.
Key drivers:
- Rate gap: The Bank of Canada maintains a cautious stance with stable interest rates, while the Czech National Bank's rate is relatively high, supporting the CZK.
- Risk/commodities: Rising oil prices, currently near 7-day highs, elevate the CAD due to Canada's status as a major oil exporter, but volatility in oil could lead to uncertainty.
- One macro factor: Recent revisions by UBS indicate easing inflationary pressures in the Czech Republic, which may bolster the CZK.
Range:
Expect the CAD/CZK to maintain its current position within the stable 2% range it has traded in over the past three months.
What could change it:
- Upside risk: A significant increase in oil prices could further strengthen the CAD.
- Downside risk: Any negative shifts in trade relations or tariffs affecting Canada may weaken the CAD.