The Canadian dollar (CAD) and Mexican peso (MXN) have recently exhibited stability with notable influences stemming from economic indicators and market sentiments. Currently, the CAD to MXN exchange rate stands at 13.09, just below its three-month average, with trading confined to a narrow range of 13.04 to 13.28. Analysts suggest that the loonie's performance is heavily reliant on oil prices, given Canada’s status as a major oil exporter. In recent weeks, oil has been trading at around $60.89, which is 3.9% below its three-month average and has seen fluctuations within an 18.8% range. This decline has contributed to a subdued outlook for the CAD, as lower oil prices hamper export revenues.
Recent forecasts indicate that the CAD may strengthen if upcoming retail sales data from Canada show a rebound. However, the currency has faced downward pressure due to trade policy uncertainties and interest rate differentials. The Bank of Canada maintained its policy rate at 2.25% amidst speculations of U.S. interest rate cuts, influencing investor sentiment towards CAD.
On the other hand, the MXN has experienced significant strengthening, trading at its highest level against the U.S. dollar in over a year. Key factors for this appreciation include high domestic benchmark interest rates, recent interest rate cuts by the Bank of Mexico, and temporary exemptions from U.S. tariffs, which have supported export resilience. The ongoing trend of nearshoring, where U.S. companies relocate production to Mexico, also aids in bolstering the peso.
The divergence in the monetary policy between the Bank of Canada and Banxico, along with the contrasting conditions in oil prices, will continue to influence the CAD/MXN exchange rate. As global market dynamics evolve, both currencies will remain sensitive to shifts in economic data, interest rate decisions, and international trade policies.
