Following rising oil prices and progress made on NAFTA talks, the Canadian Dollar has gained in value in an unexpected U-Turn. The CAD report below discusses some of the reasons for CAD's improvement; the table below shows the difference in CAD you could have achieved when buying £200,000.00 during the high and low points of the past month.
|Currency Pair||% Change||Difference on £200,000|
The CAD has seen its fortunes improve against Sterling over recent weeks and despite the Pound finding plenty of support around 1.73, is still trading over 4 cents better than it was at the turn of the month.
The CAD has mirrored its Sterling counterpart in many ways over the past 12 months, seemingly drifting towards the abyss before showing a strong turn of foot to pull it away from the cliff edge.
For months it struggled to gain any foothold in the market, as concerns over NAFTA talks, falling oil prices and concerns over the global trade markets sapped investor confidence. This in turn pushed the CAD’s value down, as investors shied away from Canada’s commodity based economy, which relies heavily on the export of its vast supplies of crude oil.
With oil prices falling for much of the past 12 months and President Trump at one stage threating to pull the US from the NAFTA agreement, it is easy to see why the CAD struggled to make any sustainable impact against Sterling, which as we all know has faced its own unique problems of late. However, as often happens the currency markets have performed an unexpected U-turn.
With oil prices once again rising and concerns over the NAFTA agreement subsiding, investors have once again returned to the Loonie, which is also likely to have benefited from Sterling’s demise over the past month. There are still some concerns that Trump’s antics could put more pressure on the global markets and this could be of detriment to the CAD, whilst a recent report in the Financial Times also indicated that business confidence in the Canadian economy was falling.
For these reasons and the CAD’s ability to fluctuate even in a more stable market, means that any clients selling CAD to buy Sterling should be monitoring this week’s events closely, to ensure that the recent gains to not dissipate ahead of some key economic data releases for the Canadian economy.
Looking ahead and tomorrow is likely to be a key day for any clients with a CAD currency exchange to execute, with the latest Bank of Canada (BoC) interest rate decision and their subsequent monetary policy statement.
BoC Governor Stephen Poloz was cautiously upbeat in his previous address and whilst the Canadian economy has posted improved numbers over the past couple of months, he is likely to air on the side of caution regarding any bullish predictions. With no indication that we will are likely to see the central bank raise interest rates, I don’t anticipate this key release to be of major benefit to the CAD.
On Thursday we also have revised GDP data, followed by Manufacturing figures on Friday, so expect increased volatility on CAD exchange rates over the coming days.
For more information on how future data releases could affect your currency requirement, call our trading floor on 01494 725 353 or email me here.
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