The exchange rate between the Canadian dollar (CAD) and the New Taiwan dollar (TWD) is currently at 21.88, slightly above the three-month average of 21.68. This stability contrasts with the volatility seen in broader market movements, as CAD has fluctuated in a range of 5.1%, between 21.23 and 22.31.
Recent forecasts surrounding the CAD suggest a mix of optimism and caution. Analysts have noted bearish sentiment towards the currency, with net short positions hitting a five-month high. This trend follows disappointing job reports from both the U.S. and Canada, heightening expectations for interest rate cuts from the Bank of Canada (BoC). Notably, a Reuters poll indicates that some analysts remain bullish on the loonie, projecting a potential rise to 1.36 per U.S. dollar in three months, influenced by anticipation that the BoC may approach the end of its easing cycle. However, the underperformance of CAD against other major currencies, especially in light of a drop in employment and rising unemployment, poses a risk of further depreciation.
The CAD is intricately connected to oil price movements, given Canada's status as a significant oil exporter. Currently, oil is trading near a seven-day high at 68.47, with a notable volatility range of 20.4% from 65.50 to 78.85. A stable or rising oil price can bolster the CAD, yet declining bond yields present challenges.
Conversely, the TWD is experiencing pressure from domestic monetary policy and international economic uncertainties. Recent measures by Taiwan's central bank to enforce capital control aim to mitigate the TWD's rapid appreciation, which has exceeded 10% this year. Alongside potential U.S. tariffs impacting Taiwan's export-driven economy, these dynamics may continue to influence the TWD's strength against the CAD.
Investors should remain attentive to the developments in monetary policy and labor markets in both Canada and Taiwan, as well as fluctuations in oil prices, as these will significantly shape the CAD to TWD exchange rate in the coming months.
