This Canadian Dollar report will examine the factors that could affect exchange rates in the short term to help you stay informed if you need to make a currency transfer. The table below shows the difference you would have received when buying £200,000 at the high compared to the low points during the past month.
|Currency Pair||% Change||Difference on £200,000|
The Canadian Dollar strengthened to its highest level in 3 months against the Pound yesterday amidst growing speculation that the Bank of Canada will raise interest rates at their next meeting taking place tomorrow afternoon at 2pm. Markets are factoring in a 90% chance of a rate hike from 0.5% to 0.75%, which would be the first in almost 7 years, and it is also predicted that a second hike will occur by the end of the year.
Whilst a rate hike is seen as a positive move for an economy, the Canadian economy is still struggling with a number of factors including weak inflation and a potential renegotiation of the NAFTA (North American Free Trade Agreement). However, the economy seems to be growing steadily along with the jobs sector, and the Bank of Canada changed their tone to a much more positive one last month, sparking anticipation of a rate hike looming in the near future.
As the chances of a hike are so high, I feel the currency markets have priced in the probability into the value of the Canadian Dollar. Therefore if the result is not as expected and rates are kept on hold, we could see the CAD quickly reverse the recent gains made. However, the Montary Policy Report from Bank of Canada Governor Stephen Poloz which follows this announcement will be keenly watched by investors, and any signals towards a future rate hike could cause the CAD to strengthen even further, potentially into the low 1.60’s.
As markets can move rapidly in volatile times such as these, the use of one of our Limit Order contracts would allow our systems to automatically book your currency as soon as it reaches a level determined by you. Get in touch with us today to find out about our many contract options, and how they can benefit you.
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 here.
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We received a good rate of exchange as FCD was able to offer us a rate a little higher than we would have achieved with HiFx.