This report will examine the factors that could affect exchange rates in the short term help to you stay informed if you need to make a currency transfer. The table below shows the difference you would have received in Canadian Dollars when buying £200,000 at the high compared to the low during the past month.
|Currency Pair||% Change||Difference on £200,000|
With oil prices showing signs of life and mentions of a rate hike, the Canadian Dollar has been one of the clear winners in the currency market. It has made one of the largest inroads against Sterling – with a 5% gain in the last month. Anyone looking to buy Euros has also seen a 3.9% boost. Oil prices have been rising alongside heightened tensions in the Middle-East, with key exporter Qatar suffering from a local embargo against them by other Gulf Cooperation Council countries. Seemingly there is little end in sight given their refusal to meet terms for them, which are aimed to stop terrorist financing – but there is little doubt other objectives are at play. A rising price boosts the Loonie, and from faraway politics to more local monetary policy, we are seeing similar improvements.
Some off the cuff comments with a German newspaper gave the Canadian Dollar a helping hand on Wednesday.
Stephen Poloz, the Governor of the Bank of Canada, stated he was looking much more towards next year’s expectations when deciding financial policy. The current state of the economy doesn’t warrant an interest rate hike, but his recent statements of improved inflation expectations during Q1-Q2 next year, suggests he may be considering one in advance of this.
Market activity suggests traders are pricing in a 50% chance of a rate hike in their next meeting on July 12th. Given that Poloz has previously cut rates before with almost no warning to markets, you may see a surprise result. Given the lack of forewarning, the Canadian Dollar could suddenly make massive inroads against both the Pound and the Euro.
The argument for a rate hike could be bolstered or hindered by Canadian unemployment figures to hit the wire at 12:30. Given the short period before the expected rate hike or hold announcement, markets may read heavily into future decisions based on today’s data. Currently CAD buyers seem to be in a position of heavy risk, and may be wise to move ahead of any big market movements which could harm your position further.
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