The Canadian dollar (CAD) and New Zealand dollar (NZD) are currently influenced by differing economic dynamics, affecting the CAD to NZD exchange rate.
Recent forecasts indicate that the CAD is bolstered by rising oil prices and a strengthening U.S. dollar. Analysts note that the CAD usually benefits from increases in oil prices, given Canada's status as a major oil exporter. Currently, oil prices are trading around $68.62, which is just below the three-month average, amidst a volatile trading range of 25.6%. Optimism surrounding oil could support a further appreciation of the CAD.
However, this positive outlook for the CAD may be tempered by domestic challenges. Recent inflation data showed a slowdown, with the annual rate falling to 1.7% in July, leading to increased speculation about potential interest rate cuts from the Bank of Canada (BoC). As the likelihood of these cuts rose to 70% from 56%, the CAD faces pressures that could weaken its position if the market reacts negatively to monetary policy adjustments.
Conversely, the NZD has faced headwinds as a risk-averse market environment has diminished its appeal. The Reserve Bank of New Zealand (RBNZ) recently reduced its cash rate to a three-year low of 3.00% and signaled more easing amid concerns about domestic and global economic weakness. Analysts expect that further declines in confidence and potential trade tensions, especially with the U.S. imposing higher tariffs, could hamper the NZD's recovery.
As of the latest data, CAD to NZD is trading at 1.2362, which is 1.4% above its three-month average of 1.2193 and within a stable range from 1.2015 to 1.2377. This suggests that while CAD has found some strength, the ongoing uncertainty around the NZD due to rate cuts and trade issues weighs on its performance.
Market experts suggest keeping an eye on upcoming economic data, particularly wage growth in Canada and business confidence in New Zealand. These indicators may further guide the trajectory of the CAD/NZD exchange rate amid shifting global market sentiments.
