Dayle Littlejohn
Senior Executive Dealer
Is Canadian Dollar strength on the horizon?
The Bank of Canada expect foreign trade to receive a well needed boost in the upcoming months and wage growth to rise.
Request a quoteEarlier in the week the Bank of Canada left interest rates on hold at 1.25%. As always Governor Stephen Poloz delivered his speech shortly after the interest rate decision and economists are suggesting his speech was fairly hawkish. The Bank of Canada expect improvement in the upcoming months and he went on to say that monetary policy could be tightened in the upcoming months and as early as May 30th at the next meeting.
In the table below you’ll see high to low GBP/CAD exchange rate movement and the difference when exchanging £200,000 to Canadian Dollars in the last 30 days:
| Currency Pair | % Change | Difference on £200,000 | |
|---|---|---|---|
 GBP |  CAD | 3.13% | $11,160 CAD |
However the Governor did voice concerns that investor confidence is still down due to the volatility surrounding the NAFTA negotiations even though he believes a revamped NAFTA agreement is likely. Furthermore Vice President Mike Pence even suggested earlier in the week that this could happen as early as the end of the month.
Canada’s Foreign Minister Chrystia Freeland travelled to Washington yesterday to continue with the negotiations and reports are suggesting she could return next week to try and form an agreement in principle which could be announced in the upcoming months. The rumour on the market is that Canada and the US want an agreement in place by July 1st as this is when Mexico are having their election and if the polls are correct the party that are clearly winning at present will honour the agreement.
Could we see a period of Canadian Dollar strength?
Since US President Donald Trump announced that he would pull out of the NAFTA agreement, the Canadian Dollar has had a tough time. The commentary coming from the negotiations coupled with Stephen Poloz tone yesterday at the interest rate decision leads me to think that an agreement will be made in the near future. Furthermore oil prices are on the rise and today Canada are set to release their latest inflation numbers and a rise to 2.4% is expected. If this materialises I expect this could be the nail in the coffin for the Bank of Canada to raise interest rates next month. If my predictions are correct I expect the Canadian Dollar could have a strong 2nd quarter of the year.
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.
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