The Canadian dollar (CAD) has experienced a downward trend recently, influenced significantly by fluctuating oil prices, a crucial factor given Canada's status as a major oil exporter. Currently, CAD to MXN is trading at 13.21, which is 1.1% below its three-month average of 13.36. This movement reflects a relatively stable trading range, as the exchange rate has been confined within a 4.7% band of 13.10 to 13.71 over the same period.
Analysts have noted that the CAD’s depreciation is largely driven by recent declines in oil prices, with OIL to USD now at 65.07, approximately 1.7% under its three-month average of 66.21. The volatility in oil prices is notable, as they have oscillated within a significant 15% range from 60.96 to 70.13. The interdependence of the CAD’s strength with oil prices means that any sustained drop in oil could place additional pressure on Canada’s economy and, consequently, the loonie.
Recent reports suggest that the CAD's stability against the U.S. dollar was bolstered by speculation regarding potential rate cuts from the Federal Reserve, which weakened the dollar and offered some support to CAD. However, ongoing uncertainties regarding trade agreements with the U.S. and the Bank of Canada’s decision to cut interest rates to a three-year low at 2.5% have created a challenging environment for the loonie. These factors, combined with a probable economic contraction in Canada, indicate that further pressure on the CAD could be on the horizon.
On the Mexican peso (MXN) side, the currency has also faced challenges, exacerbated by the prospect of U.S. tariffs on Mexican imports and shifting trade policies under the USMCA. Despite these pressures, an improvement in global risk sentiment, particularly linked to U.S.-China trade developments, has provided some support for the peso.
In summary, ongoing economic developments, trade negotiations, and fluctuations in oil prices will continue to shape the CAD to MXN exchange rate. Traders and businesses should closely monitor these indicators as they navigate their international transaction strategies.
