The Canadian dollar (CAD) has shown mixed performance against the Mexican peso (MXN) recently, primarily influenced by fluctuations in oil prices and domestic economic data. As a commodity-linked currency, the CAD benefits from rising oil prices due to Canada’s significant role as an oil exporter. Currently, oil prices are trading at around $60.83, which is 4.5% below a three-month average of $63.69, indicating a volatile range that has placed downward pressure on the loonie. Analysts cite the recent stabilization in oil prices, along with a slight uptick of 1.5% noted in early December, as a potential positive catalyst for the CAD.
The Bank of Canada's recent decision to cut its key interest rate to 2.25% also plays a critical role in shaping the CAD outlook, as lower interest rates typically discourage foreign investment, leading to currency depreciation. However, robust GDP growth reported at an annualized rate of 2.6% in Q3, exceeding expectations, suggests a resilient economic backdrop that may help support the loonie in the near term despite mixed readings from the manufacturing sector.
On the other hand, the Mexican peso appears to maintain a stable exchange rate, forecasted to trade within a decade-old range of 16.00–22.00 per U.S. dollar into 2026, with a slight expectation of depreciation. Recent monetary easing by Mexico's central bank, Banxico, which reduced the benchmark interest rate to 7.75%, may narrow the interest rate differential with the U.S. This shift could potentially affect the MXN’s attractiveness in global markets, enhancing its performance against currencies like the CAD.
Overall, the CAD/MXN exchange rate has been steady, currently at 13.07, positioned just 0.5% below its three-month average of 13.14 within a 1.9% range. The market will likely remain sensitive to both changes in oil price dynamics and economic indicators from Canada and Mexico, which are critical in determining the future trajectory of this exchange rate.
