The Canadian dollar (CAD) has shown some buoyancy recently, supported by a stronger US dollar. Analysts note that while oil price fluctuations remain a critical factor, weakening crude prices have limited the CAD's gains. As Canada depends heavily on its oil exports, a rise in oil prices has historically bolstered the CAD. Currently, the price of Brent Crude oil is trading at $68.80, 3.2% above its three-month average, reflecting a volatile range from $60.14 to $78.85.
Recent economic indicators, including the June services PMI, could further influence CAD performance. A continuation in sector contraction would likely challenge the 'loonie' in maintaining its value. Furthermore, the recent political changes in Canada, including the resignation of Prime Minister Justin Trudeau and the appointment of Mark Carney, introduce some uncertainty regarding future economic policy and stability.
Inflation and interest rates will also play pivotal roles in the CAD's trajectory moving forward, even as the Bank of Canada has paused interest rate cuts at 2.75%, providing some stability to the currency. However, ongoing trade tensions with the U.S. posed by tariff threats create headwinds that could limit the CAD's upside, with market observers emphasizing the tight correlation between CAD performance and U.S. economic health.
As for the Philippine peso (PHP), challenges loom due to unfavorable external balances and geopolitical tensions. The U.S. has imposed a tariff on goods from the Philippines, impacting the peso’s stability. Analysts foresee a potential depreciation against the U.S. dollar, heightening concerns about the peso's future performance. Political uncertainties, particularly in light of recent events surrounding former President Rodrigo Duterte's arrest, may exacerbate these issues.
Current exchange rate data shows the CAD to PHP trading at about 41.60, approximately 2.2% higher than its three-month average of 40.72. The CAD has witnessed stable trading within a range of 39.72 to 41.81, suggesting that, despite challenges, the CAD may continue to hold its ground relative to the PHP in the near term.
Overall, the future trajectory of the CAD relative to PHP will heavily depend on oil market trends, domestic economic indicators, geopolitical stability, and broader global trade dynamics. Market participants should remain vigilant to changes in these areas that may influence exchange rates in upcoming weeks.