Canadian dollar (CAD) Market Update
The Canadian dollar (CAD) experienced downward pressure recently, primarily driven by falling oil prices, which are critical to Canada's economy. As a commodity-linked currency, the CAD tends to react sensitively to fluctuations in energy prices. Currently, the oil market is facing challenges, with OIL to USD trading at seven-day lows near 79.35, though still significantly above its three-month average of 74.68. Analysts suggest that the 6.3% increase over the three-month period reflects an oversupply situation contributing to the volatility, with the crude market having traded within a 15.7% range. In light of this, FX experts warn that continued declines in oil prices could further undermine the “loonie,” especially in the absence of notable Canadian economic data to bolster its strength.
Market view indicates that the current exchange rate for CAD to USD at 0.6973 represents a 1.2% dip below its three-month average of 0.706, having fluctuated in a stable range between 0.6901 and 0.7227. Meanwhile, CAD to EUR at 0.6700 is hovering just below its three-month average, while CAD to GBP has recently hit seven-day lows around 0.5652, showing stronger performance at 1.0% above its three-month average of 0.5594. With the backdrop of potential tariff increases from a renewed Trump administration impacting trade relationships and commodity demand with Europe and China, CAD may grapple with additional headwinds. Economists emphasize the importance of keeping a close watch on oil prices, as persistent weakness could continue to exert significant influence on the Canadian dollar's trajectory in the near term.
