The CAD/MXN currency pair edged up on Friday, reversing a loss from the prior trading session, as the commodity-linked Canadian Dollar drew support from rising crude oil prices.
Crude oil gained following a suspected projectile attack on a cargo vessel near Oman. The incident abruptly halted United Nations evacuation activities in the strategically important Strait of Hormuz and has reignited concerns over global energy supply security.
Geopolitical risks intensified after Thursday’s market close, when two US officials indicated that Iranian forces had opened fire on the ship as it attempted to pass through the strait. In response, Iranian authorities issued a sharp warning that the safety of vessels traveling outside officially designated Hormuz shipping lanes is no longer assured.
On the monetary front, Rabobank strategists Christian Lawrence and Molly Schwartz emphasized that Banco de México (Banxico) would likely keep policy rate unchanged through the end of the year. This stance is consistent with their expectations for both the Bank of Canada and the Federal Reserve, where they see no policy moves before year-end.
For the BoC, they reference a policy rate of 2.25%, while for the Fed, they cite an upper bound of 3.75%.
Banco de México left its benchmark rate at 6.50% at the June 25th policy meeting, matching consensus expectations.
The CAD/MXN currency pair was last up 0.16% on the day to trade at 12.3464.
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