Brent oil rises to a 7 month high at $50 a barrel, the Canadian Dollar has strengthened significantly within the last 24 hours.
The Bank of Canada announced yesterday that they would be keeping interest rates on hold at 0.5%, as it has been for over a year. This was followed by a Statement from the BoC which noted that growth for the first quarter was roughly where it should be, but that it could go into negative territory in the second quarter. The recent wild fires in Alberta caused oil production to cease, something which the Canadian economy relies on heavily, and this will likely cut around 1.25 percentage points off GDP growth in the second quarter.
They did not seem overly concerned about this as a rebound in Q3 is to be expected as oil production continues and the area rebuilds, and this positive outlook helped the CAD strengthen against the Pound throughout the afternoon by over a cent.
The CAD continued its rally throughout the night after Brent Crude oil prices rose above $50 a barrel for the first time in almost seven months. Over the last 24 hours, a $200,000 purchase has become £4,000 more expensive, and highlights just how much of an impact the price on oil has on the currency.
The next main data release to watch out for will be on Tuesday when the next set of GDP figures for the first quarter of this year are provided. I would expect this data to be positive in line with growth in Q1 being on track, as this information is based on the time period before the wild fires began, when the economy was performing seemingly well. If this is the case we could see GBP/CAD fall below the 1.90 mark once again, and if you have a CAD requirement it may be sensible to move sooner rather than later.
If Brent oil continues to rise, the Canadian Dollar is likely to strengthen. If you have a requirement for CAD, it would be a good time to get in touch with one of our brokers sooner rather than later. Call us on 01494 725 353.
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