This Canadian Dollar report will examine the factors that could affect exchange rates this week in order to help you stay informed if you need to make a currency transfer. The table below shows the difference you would have received when buying £200,000 at the high compared to the low yesterday.
|Currency Pair||% Change||Difference on £200,000|
The Canadian Dollar rocketed yesterday after a surprise interest rate increase from the Bank of Canada. The central bank raised interest rates by 0.25% to 1% and caught the markets off guard; expectation was for another potential hike in October or even later. This is the second hike this year after interest rates were raised only two months ago in July and it follows very strong Gross Domestic Product figures seen last week which were well above the Bank of Canada’s expectations.
The combination of such strong economic growth and concerns over an overcooked housing market in Canada could pave the way for additional rate hikes going forward which could see further gains for the Canadian dollar. Considering the Bank of Canada has hiked twice in such quick succession would suggest it could be more aggressive going forward supporting the dollar further.
There is every possibility now that Canada will overtake the US in terms of raising interest rates with potentially another two additional hikes this year.
The Canadian dollar is also impacted by events stemming from North Korea especially after the nuclear test that was carried out last weekend. The price of oil has been generally falling in recent weeks largely as a result of the crisis on the Korean peninsula which has kept pressure on the Loonie as global uncertainty is factored in. Any fall in the price of oil is usually seen as negative for the Canadian dollar as Canada is a major net exporter of the commodity. Any improvement in relations should help support the Canadian dollar but judging by recent rhetoric coming from North Korea at the moment and with Foundation Day fast approaching, the dollar could see some volatility from this corner. Any missile or nuclear test could see the Canadian dollar come into trouble this weekend.
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.