The CAD to MXN exchange rate has shown signs of stability recently, currently sitting at near 7-day highs around 13.08, just below its 3-month average. This stability has been observed within a relatively narrow 1.8% range from 13.04 to 13.28, driven largely by external economic factors and key domestic events.
Analysts note that the Canadian dollar (CAD) has remained flat due to stalled oil prices, a significant determinant of its value as Canada is a major oil exporter. Recently, oil prices have experienced volatility, currently trading at around 62.03 USD, which is 2.6% below the 3-month average of 63.67. This downturn in oil prices often results in downward pressure on the CAD, as decreased revenues from oil exports can impact Canada's economic stability.
Recent forecasts indicate that the CAD's performance may be influenced by several factors. Trade tensions, notably increased tariffs imposed by the U.S. and retaliation from Canada, have created an environment of uncertainty that contributes to the CAD's depreciation. Furthermore, the Bank of Canada’s interest rate policy, unchanged at 2.25%, presents a stark contrast to the U.S. Federal Reserve's potential for rate cuts, which could further impact the CAD's strength. Despite these headwinds, positive economic indicators, including a 2.6% GDP growth in the third quarter and a declining unemployment rate, are providing some support to the currency.
On the other hand, the Mexican peso (MXN) has appreciated recently, reaching its strongest position in 17 months at around 17.97 per USD, benefiting from a weaker U.S. dollar and Mexico's high interest rates. The Bank of Mexico's recent rate cuts from 10% to 7.75% aim to stimulate economic growth while maintaining export resilience through tariff exemptions and the ongoing trend of nearshoring, where U.S. companies relocate production to Mexico.
Market sources indicate that the interplay between the CAD and MXN will continue to depend on external and internal economic developments, specifically oil market trends for the CAD and interest rates for the MXN. As both currencies navigate these differing paths, careful monitoring of commodity prices, trade relations, and economic indicators will remain critical for businesses and individuals engaged in international transactions.
