CAD/HKD Outlook:
Slightly positive, but likely to move sideways given the rate is above its recent average but lacks a clear driver.
Key drivers:
- Rate gap: The Bank of Canada has taken a cautious stance with its interest rates, while the Hong Kong Monetary Authority continues interventions to maintain its currency peg, causing a divergence in monetary policies.
- Risk/commodities: Oil prices are currently volatile but trading above their recent average, potentially providing some support for the Canadian dollar amid rising prices.
- Macro factor: Recent U.S.-Canada tensions and tariffs are impacting trade relations, which could weigh on Canadian exports and the CAD.
Range:
The CAD/HKD is likely to hold its current position within the stable range previously established.
What could change it:
- Upside risk: A significant rebound in oil prices could boost the CAD further if Canada benefits from increased oil revenues.
- Downside risk: Increased tensions or further tariffs from the U.S. could negatively affect the CAD, putting downward pressure on the exchange rate.
