The Canadian dollar remained on the back foot yesterday after a quiet start to this week, owing to the most recent update from the International Monetary Fund (IMF). The IMF has stated that ‘dangerous undercurrents’ are a threat to the global economy. The IMF has also highlighted the issues surrounding the US-China trade war, and suggested that it’s taking its toll on the global economy, with emerging markets impacted especially. There have also been outflows of deposits from emerging markets owing to these concerns, which is another reason the Canadian dollar has weakened recently.

Currency Pair% Change in 1 monthDifference on £200,000
GBPCAD1.92%CAD $6535.70

With the Canadian economy being heavily export driven, especially regarding oil, it’s understandable that a slowdown in the global economy would hit the Canadian economy. These fears haven’t manifested into CAD weakness quite to the same extent as with the AUD. 

The pound to Aussie dollar rate sits at a 2-year high whereas GBPCAD would need to increase by roughly 5% higher than the current levels to reach the same feat.

The new NAFTA agreement is now in place and it’s been re-named the United States-Mexico-Canada Agreement, or USMCA. CAD exchange rates jumped once the announcement was made; whether they can hold onto these will depend on the health of the global economy.

Oil prices are also at annual highs which has helped CAD, with WTI prices at 4-year highs.

Oil and Auto sectors pose biggest threat to CAD rates

Housing market in focus this week

The Canadian housing market will be in focus later this week, with the New Housing Price Index figures due at 13.30pm tomorrow. Expectations are for 0.1% growth although like with yesterday’s Housing Starts data, I’m not expecting to see much movement after the release unless these figures significantly deviate from expectations.

Another potential market mover is the US Jobless Claims along with Inflation data set for release tomorrow at 13.30pm. Canada’s economy is closely linked to the US economy so we could see movement if those figures spring a surprise.

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