Arrange the following steps in the correct sequence of how a currency exchange rate affects trade balance: A) Canadian consumers buy more Mexican goods, B) The demand for pesos increases, C) The exchange rate of the peso appreciates, D) The supply of Canadian dollars increases.

When the exchange rate changes, it affects how much of another country's goods we can buy. First, if the Canadian dollar weakens compared to the peso, Canadian consumers will start buying more Mexican goods because they seem cheaper. This increase in demand for Mexican goods leads to a higher demand for pesos since Canadians need pesos to pay for those goods. As Canadians buy more pesos, the supply of Canadian dollars increases in the market. Finally, as more pesos are needed, the peso appreciates, making it more valuable compared to the Canadian dollar.