The recent performance of the Canadian dollar (CAD) against the Taiwanese dollar (TWD) has been influenced by multiple factors, notably its correlation with the stronger US dollar and fluctuating oil prices. Currently trading at 21.31 TWD, the CAD is approximately 4.0% below its three-month average of 22.19, which indicates a prevailing bearish trend. Analysts highlight that the CAD has experienced notable volatility, with a trading range of 11.7% from 21.11 to 23.59.
Supporting the CAD was its positive correlation with the US dollar. However, weakening oil prices have limited its gains, as Canada's economy is heavily linked to oil exports. Currently, oil prices have recently registered at 68.80 USD per barrel, which is 3.2% higher than the three-month average of 66.66, reflecting significant volatility in the oil market with fluctuations between 60.14 and 78.85 USD. This suggests that any decline in oil prices could correlate with further depreciation of the CAD.
Political developments in Canada, including a leadership change and escalating trade tensions with the US, have introduced additional uncertainty for the CAD. The recent appointment of Mark Carney as Prime Minister following Justin Trudeau's resignation, alongside retaliatory tariffs imposed by both nations, has prompted economists to forecast limited upside potential for the CAD against the TWD.
The Bank of Canada (BoC) has paused its interest rate cuts, maintaining a benchmark of 2.75%, which has provided some support for the CAD. Nonetheless, indications of a weak services PMI could lead to additional challenges for the currency, especially if it points toward extended economic contraction.
Conversely, the Taiwanese dollar (TWD) faces challenges from the ongoing global tech slowdown and geopolitical tensions that could influence its stability. The imposition of reciprocal tariffs by the US on Taiwanese goods adds further headwinds to the TWD. Experts assert that the performance of the TWD will be intricately linked to developments in the technology sector, as well as the broader geopolitical climate.
Moving forward, the direction of the CAD to TWD exchange rate will heavily depend on the interplay between oil prices, the Bank of Canada's monetary policy, and international trade dynamics. Currency watchers are advised to stay attuned to these developments for insights on potential market shifts.