The Canadian dollar (CAD) has recently experienced a downward trend, initially weakening alongside the US dollar due to disappointing performance in key economic indicators, including a stronger-than-expected Ivey PMI which failed to bolster the currency. With the jobs report for July expected to show an increase in unemployment, analysts warn that this could further pressure the CAD in the near term.
The Mexican peso (MXN), on the other hand, has demonstrated notable volatility amid ongoing trade tensions, particularly regarding potential U.S. tariffs. Recent developments, including President Claudia Sheinbaum's announcement of retaliatory measures against U.S. tariffs, initially caused the peso to fall. However, it later rebounded when U.S. officials hinted at a possible easing of tariffs, leading to optimism about potential negotiations between Mexico and the U.S. Analysts suggest that the market is cautiously optimistic that the 25% tariffs will not be permanent.
Recent CAD to MXN trading has shown the Canadian dollar at 13.55, which is approximately 1.9% below its three-month average of 13.81. Throughout this period, CAD/MXN has remained within a stable range, fluctuating between 13.53 and 14.16. This stability contrasts with the more chaotic fluctuations observed in oil prices, where recent data indicates oil has been trading at 66.43, roughly 2.8% below its three-month average of 68.34, with a substantial volatility range of 62.78 to 78.85.
Given that Canada is a principal oil exporter, CAD is significantly impacted by movements in oil prices. The fluctuations in oil prices and the Bank of Canada's recent decisions are critical factors analysts will be monitoring closely. With the Bank of Canada previously pausing interest rate cuts, this policy shift could provide some support for the CAD. However, ongoing trade uncertainties and U.S. tariff threats are likely to limit upside potential for the Canadian dollar in the near future.
Overall, the CAD to MXN outlook remains influenced by a confluence of internal economic data and external geopolitical developments. Investors and businesses engaged in international transactions should keep a close eye on upcoming economic reports and political announcements that could sway exchange rates dramatically in the coming weeks.
