The Canadian dollar (CAD) has recently strengthened against the New Taiwan dollar (TWD), reaching 60-day highs near 22.20, which is 1.0% above its three-month average of 21.96. This appreciation has been attributed to positive developments in oil prices, as higher crude prices tend to bolster CAD, given Canada’s status as a major oil exporter. Oil prices have offered a mixed picture, currently trading at 64.20, which is 2.2% below the three-month average of 65.62 and reflects significant volatility, shifting within a 15.0% range.
Recent forecasts highlight a combination of factors influencing the CAD's performance. Analysts note that the Bank of Canada has been implementing interest rate cuts, recently lowering its key rate to 2.25% to address economic uncertainties and a weak job market. These rate cuts, while intended to stimulate the economy, could weaken the CAD in the long term. However, recent U.S. labor data showing significant job cuts has added support for the CAD, as a weakened dollar can enhance CAD's attractiveness.
On the TWD side, Taiwan's central bank has provided a more optimistic economic growth forecast of 4.55%, primarily driven by strong semiconductor exports. However, uncertainties surrounding U.S. tariffs pose risks that could dampen the TWD's performance against currencies like the CAD.
The overall market sentiment suggests that continued fluctuations in oil prices will be pivotal for CAD, while for the TWD, the balance between economic growth and external tariff threats will be critical. Investors should closely monitor these dynamics, as they will significantly influence the CAD/TWD exchange rate in the coming weeks.
