Sterling increased in value versus the Canadian dollar on the interbank market this week, in part because the UK and Irish leaders enjoyed a “detailed and construction discussion” around Brexit yesterday. This is in spite of the fact that Canada’s housing market activity has exceeded expectations.

Meanwhile, looking to the foreseeable future, the Canadian dollar could be affected by a range of factors, including the resumption of the USA’s and China’s trade discussions, Canada’s general election, and the Bank of Canada’s and US Federal Reserve’s interest rate decisions.

Canada’s housing starts, building permits exceed predictions

The Canadian dollar shed value versus its British counterpart this week, even though Canada’s construction industry began building more new housing than forecast.

Canada’s housing starts rose by +221,200 in September, above economists’ predictions for +214,500 new units. Moreover, Canada’s building permits increased by +6.1% in August, easily exceeding forecasts for a -1.0% drop, as well as July’s figure of +3.2%.

This suggests that both Canada’s construction industry and housing market remain in fit form, even though the Bank of Canada’s interest rates remain at 1.75%, higher than many other developed nations.

Canada’s unemployment data, US/China trade talks ahead

Canada’s unemployment data, US/China trade talks ahead

Looking to the next few days, the value of the Canadian dollar might be influenced first by Canada’s unemployment statistics for September, due this afternoon.

It’s forecast that Canada’s joblessness rate held at 5.7% last month, as the economy created 10,000 new roles, fewer than August’s 81,100 new positions. Any surprises above or below these predictions could affect the loonie dollar.

Elsewhere, the United States and China are scheduled to resume their trade talks shortly, to reach a trade agreement. The discussions could affect the Canadian dollar, both because Canada trades closely with the USA, and because the loonie dollar is a so-called “commodity currency”, vulnerable to global trade flows.

Canada’s election, interest rate decisions could affect CAD

In addition, looking over the next few weeks, the Canadian dollar might be influenced by Canada’s general election, due on October 21st. In part, this is being considered a referendum on PM Justin Trudeau’s leadership.

Moreover, both the USA’s and Canada’s central banks will announce their next interest rate decisions on October 30th. It’s thought that the US Fed may cut to 1.5%-1.75%, though its Canadian counterpart looks likelier to stay on hold at 1.75%.

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