As a commodity currency, the Canadian Dollar is struggling as a result of the recent trade tariffs imposed by the US and China, and the fact that as of yet there has been no agreement on the new terms for NAFTA. The table below shows the difference you could have achieved when buying £200,000.00 during the high and low points of trading yesterday.

Currency Pair% ChangeDifference on £200,000
GBPCAD0.8%$2960 CAD
Weakening commodity prices push CAD lower

CAD Still Revolves on Future Trade Outlook

The Canadian dollar is seeing continued volatility after what was a good bounce towards the end of last week. The Canadian dollar is proving unpredictable at present on the back of the North American Free Trade Agreement (NAFTA) trade negotiations and also the ongoing trade tariffs between the US and China. Canada exports around 75% of its total exports to the US and so any changes to trade can have a huge impact on the Canadian economy and hence the Canadian currency. Talks on NAFTA have still not advanced sufficiently to reach a deal in principle. It has been hoped there may be sufficient progress ahead of a summit later this month which now leaves a continued uncertain period and which keeps pressure on the Loonie.

The Canadian dollar as a commodity currency with its large export markets for commodities including oil is also coming under pressure from the trade tariffs imposed between the US and China. Any escalation in tensions between the two nations are likely to have a knock on effect on the Canadian Dollar should global growth slow. These political developments will be crucial for the Dollar in these coming weeks and clients looking to sell Canadian Dollars may see some better opportunities if agreements on trade can be reached.

When will the Bank of Canada Raise Interest Rates?

There are also other reasons to be optimistic for the Canadian dollar and not just a positive outcome on NAFTA in the coming months. The Bank of Canada are tipped to raise interest rates later this year and although a rate hike is not expected at the April meeting there is a good chance there may be one by July. A rate rise should help support the Canadian dollar and an increase in commodity prices should have the same effect. Considering inflation climbed sharply to 2.2% in February which is the highest in three years it is a good reason for the central bank to inch closer to raising rates again. Similarly the rate of unemployment remained at 5.8% on Friday maintaining the lowest levels seen in the last forty years. A buoyant economy and progress on NAFTA could see a sharp correction and the Dollar drive higher.

Canadian housing starts and building permits for new construction projects are both released this afternoon which should give some indication as to the health of the housing market.

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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Exchange rates on this page are interbank rates and indicate where the market is trading to show the performance of a currency pair. They are not indicative of the rates which we offer. The information on this web site is provided free of charge for information purposes only. It does not constitute advice to any person on any matter. Foreign Currency Direct plc. ("FCD") makes every reasonable effort to ensure that this information is accurate and complete but assumes no responsibility for and gives no warranty with regard to the same.