The Canadian dollar (CAD) has faced significant challenges in recent weeks, primarily due to tariff-related concerns stemming from the U.S.-Canada trade relationship. Following the signing of an executive order by former President Trump, which raised U.S. tariffs on Canadian goods to 35%, analysts predict continued downward pressure on the CAD in the near term. This situation is exacerbated by ongoing political instability in Canada after recent leadership changes. The appointment of Mark Carney as Prime Minister has not alleviated fears about the future of the Canadian economy amid escalating trade tensions.
Trade disputes have led to a retaliatory backdrop, with the U.S. imposing a 25% tariff on Canadian steel and aluminum. This uncertainty has kept analysts cautious about the CAD's upside potential. They highlight that the CAD's recovery might be limited unless a resolution to the trade tensions is reached. Moreover, recent forecasts suggest that the CAD could be supported by the Bank of Canada’s decision to pause interest rate cuts, maintaining a benchmark rate at 2.75% as of April 2025. This decision has provided some strength to the loonie, especially as oil prices have risen, benefiting the Canadian economy in recent weeks.
As for oil, it has been a determining factor for the CAD, with recent prices hovering at around $69.30 per barrel—1.7% above the three-month average. Analysts note that a solid performance in oil prices can bolster the CAD's value, yet fluctuations and volatility remain significant, with prices having ranged dramatically from $60.14 to $78.85.
On the other side, the Taiwanese dollar (TWD) faces its own set of challenges. The imposition of a 32% tariff by the U.S. on Taiwanese goods as part of ongoing trade conflicts has raised concerns about the TWD. Additionally, geopolitical tensions concerning Taiwan's relationship with China could weigh heavily on the TWD, particularly given Taiwan's vital technology sector. Any global economic downturn affecting technology demand could further complicate the outlook for the TWD.
Currently, the CAD to TWD exchange rate is trading at around 21.65, reflecting a recent peak near its 30-day highs and indicating a stable range of trade between 21.11 and 21.97 over the past three months. As market participants analyze these developments, both currencies stand at pivotal points influenced by external trade policies, geopolitical developments, and their respective economic conditions.