As the Canadian economy relies heavily on oil, making up 25% of their annual exports ($112Bn last year) it is of no surprise speculation over future oil prices drives speculation over the future value of CAD. This very factor was the main reason yesterday GBP was forced to surrender the 0.5 cent gains it made against CAD on Friday last week after the International Energy Agency published findings the oil industry has begun to make a weak recovery on the back of increasing demand from India and China.
Further stating because investment in the upstream oil industry has remained at record lows between 2015 and 2016 supply may struggle to keep up with demand beyond 2020.
The strength of CAD looks set to continue as the economy beat Reuters expectations for an annualised 2% growth rate for the fourth quarter of 2016, coming in at 2.6%. Even surpassing that of US growth for the same period of 1.9%. If we see a continuation of equally strong data in the coming weeks I can see GBP/CAD shifting down and testing the 1.60 barrier not broken since January.
Later today at 3pm we have Ivey Purchasing Managers Index for February released, capturing business conditions in Canada. Estimates are for a further increase to be seen on January from 57.2 to 58.9, if this release fails to live up to expectations we could see short term opportunities for those with a CAD purchase requirement.
However, Friday will be the key day this week for those with a CAD requirement. Investors will watch keenly to see whether the Canadian economy can continue the surprisingly strong run of form after the 48,300 jobs created in January with participation rate and unemployment rate released at 1:30pm.
Pound to Canadian Dollar exchange rates may edge lower in the coming days and weeks, and those with a CAD buying requirement may be prudent to act sooner rather than later. Call us today on 01494 725 353 or email me here to get a free quote.