The Canadian dollar (CAD) has displayed mixed performance recently, primarily driven by the dynamics of oil prices and its correlations with the U.S. dollar (USD). As Canada is a significant oil exporter, fluctuations in oil prices are critical to the CAD's valuation. Currently, WTI crude is trading at approximately 65.16 USD, just 1% below its three-month average of 65.79 USD, with a volatile range between 60.96 and 70.13 USD. Analysts note that rising oil prices typically support the CAD, while declines can lead to depreciation due to reduced revenues from Canadian exports.
Recent forecasts from the Bank of Canada indicate a dovish stance after two consecutive interest rate cuts in September and October, bringing the rate down to 2.25%. These reductions reflect concerns over a weakening job market and economic uncertainties. Lower interest rates often weaken currencies as they deter foreign investment. Consequently, expectations of further rate adjustments could introduce additional volatility for the CAD.
In the context of the CAD/TWD exchange rate, currently at 22.10, the currency pair is only 0.7% above its three-month average of 21.94. It has remained stable, trading in a narrow range of 2.7% from 21.73 to 22.31. This stability may reflect not only the current oil price developments but also the broader economic outlook and risk sentiment influenced by U.S. labor market data, which recently showed significant job cuts, thereby exerting pressure on the USD and indirectly supporting the CAD.
In Taiwan, the New Taiwan Dollar (TWD) is influenced by domestic economic forecasts and external pressures such as U.S. tariffs. The Central Bank of Taiwan has recently raised its economic growth forecast to 4.55%, albeit warning that trade tensions could adversely affect its export-driven economy. Recent volatility of the TWD and tighter monetary conditions have led life insurers to adjust their hedging practices against currency fluctuations, further emphasizing the impact of global factors on the TWD's performance.
As Canadian monetary policy evolves and oil prices fluctuate, those engaging in currency transactions should monitor these indicators closely, as they play crucial roles in determining the direction of the CAD/TWD exchange rate in the coming weeks.
