Getting the best exchange rate can be achieved by understanding what is driving rates and the service of a specialist currency broker. Below are movements in just a month affecting Canadian Dollar rates when buying £200,000:
|Currency Pair||% Change||Difference on £200,000|
The Bank of Canada hiked its interest rate yesterday from 0.5% to 0.75% and this was the first hike in seven years. The Central Bank reasoning for the hike was that growth had broadened across all industries and regions and would be sustained. Off the back of the news GBPCAD dropped from 1.6650 to 1.65 meaning a 200,000 Canadian dollar purchase will now cost an additional £1,100.
However the Governor of the Bank of Canada Stephen Poloz told the press that he and his central bank colleagues have agreed the Bank of Canada are not planning to hike rates again anytime soon and future decisions will be dictated by upcoming economic data and in particular inflation levels.
With inflation currently sitting below the Bank of Canada’s 2% target I am surprised the Bank of Canada chose to raise interest rates yesterday afternoon. If inflation now falls as investors start to save instead of spend economists will question the Bank of Canada’s decision.
Even though the Bank of Canada have raised interest rates for the first time in seven years, it’s not all smiles for Canadian dollar sellers. Oil prices continue to drift in the mid-40s and in many cases reports are suggesting share prices for the big players within the industry are retesting 2016 lows. The problem the Canadian dollar has is that the CAD heavily relies on oil prices as oil is Canada’s largest export.
With OPEC struggling to sustain oil in the mid-40s let alone the 50s that many international companies have eluded to for the business to thrive, international companies including Houston based oil producer Apache are walking away from Canada. Unless OPEC can find a way to stop a flooded market I agree with Goldman Sachs and believe that oil prices could be as low as $40 a barrel by the turn of the year which could have a negative impact on the Canadian dollar. Therefore Canadian dollars sellers may want to take advantage of what may be only a spike in the market and nothing more.
Thank you for reading today’s market report, I would greatly appreciate any feedback you have and would take pleasure in replying personally. I am more than happy to assist you with any of your currency requirements. Feel free to e-mail me at here.
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