The exchange rate between the Canadian dollar (CAD) and New Zealand dollar (NZD) is currently at 1.2633, reflecting a 1.8% increase above its 3-month average of 1.2408. This upward movement comes amid a stable trading range of 5.1%, oscillating between 1.2094 and 1.2708.
The Canadian dollar has faced challenges recently, despite a rebound in oil prices, which typically support the loonie due to Canada's status as a major oil exporter. However, current oil prices are trading at 62.56 USD per barrel, roughly 4.4% below the 3-month average of 65.44 USD, indicating volatility and potential headwinds for the CAD. Analysts note that fluctuations in oil prices play a critical role in influencing CAD's strength, as lower prices diminish revenue from exports.
In terms of monetary policy, the Bank of Canada (BoC) has lowered interest rates twice in recent months, bringing them down to 2.25%. This accommodative stance aims to support economic growth amid uncertainties in the labor market. The recent U.S. labor market data, showing significant job cuts, has also contributed to subdued investor sentiment towards the CAD while indirectly supporting it due to expectations of a more dovish Federal Reserve.
Meanwhile, the New Zealand dollar has exhibited mixed performances, influenced by a rising unemployment rate, which reached 5.3% in Q3 2025, and an unexpected 50 basis point rate cut by the Reserve Bank of New Zealand (RBNZ) that has drawn attention to economic growth concerns. Although inflation has increased to 3%, the overall state of the New Zealand economy remains fragile, with a recorded contraction of 0.9% in Q2 2025. Such economic indicators suggest that the NZD may struggle to maintain strength in the face of domestic challenges.
As the markets look ahead, the interplay between Canadian economic data, oil price movements, and broader global trends will be crucial in determining the future trajectory of the CAD/NZD exchange rate. Investors should remain attentive to these developments, as shifts in sentiment and policy decisions could lead to further volatility in currency markets.
