The Canadian wildfires in Alberta have now been put out but the economy will be hit by the disaster even as the price of oil perks.It may take some time before business continues as normal so expectations for a stronger CAD may take some time to materialise. The table below highlights the strong and weak points for GBPCAD since April 10th. You can view live exchange rates for a number of currencies here.
The Canadian dollar has struggled throughout May as the Oil Sands Fires in Alberta has really hurt Oil Production. Estimates put the Fires at their peak as halting up to a million barrels of Oil per day from what is the third largest proven Oil producing area in the world. The halts in production have actually caused the overall price of Oil to rise but the Canadian currency is not benefiting as it usually would. The price of Oil rising usually leads to a stronger Canadian dollar since the economy there is very heavily reliant on Oil production.
Unfortunately the negative consequences of this disaster will be largely borne by the Canadian economy and the poor people of Fort McMurray who will feel the effects of this both financially and emotionally in the future.
The price of Oil and the cost of the fallout from the Sands Fires are likely to be the main drivers on the Canadian dollar in the coming weeks, whilst the fires are now out it will take time for confidence to return. The main impact is on the people as the fires raged through the towns, many areas are without power or water. The Canadian dollar is therefore likely to struggle to rebound quickly as the biggest impact has really been on the people who work there with 80,000 people having been displaced. New homes and offices will have to be built which will all take time. Longer term though the Canadian dollar should rebound from this crisis.
Assuming the price of Oil continues to rise once the Oil fields and workers are back to business, the Canadian dollar should benefit. If you are buying Canadian dollars this tragic and unfortunate event has prompted a weakness in the Loonie which seeing as the worst of the event is over will not keep the good people of Fort McMurray nor the Canadian dollar down for long.
Its highly likely GBPCAD rates will weaken as the price of oil rises and Canada recover from the recent Alberta fires. It would be a good time to get in touch with one of our brokers sooner rather than later to secure the best rates. Call our trading floor on 01494 725 353 or email me here.
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