Sterling fell somewhat versus the Canadian dollar on the interbank market this week. As with other major currencies, Parliament’s decision to delay passing PM Johnson’s Brexit legislation affected the pound.
However, another influence on the GBP/CAD interbank exchange rate this week was Canada’s election, in which current Prime Minister Justin Trudeau won, although without a majority.
Elsewhere, Canada’s retail sales fell in August, said trusted statistics this week, although the Bank of Canada (BoC) looks set to keep interest rates on hold at 1.75%, unlike other major central banks.
Canada’s Prime Minister Justin Trudeau won the country’s general election this week, though with just 157 seats, -20 fewer than last time, and -13 below a majority.
As a result, Mr. Trudeau’s Liberal Party may have to depend on Canada’s other left-wing parties, namely the New Democratic Party (NDP) and Greens, to pass legislation. However, Mr. Trudeau has ruled out forming a formal coalition with these parties, instead preferring to pass laws on a case-by-case basis.
Mr. Trudeau’s victory has strengthened the Canadian dollar, both because he’s considered a responsible, moderate leader and because it signals continuity in Canada’s economic and political outlook.
However, in spite of the boost that Mr. Trudeau’s re-election has given to the Canadian dollar, Canada’s economy showed signs of weakness this week.
To be specific, Canada’s retail sales unexpectedly fell by -0.1% in August, according to Statistics Canada (StatsCan), below forecasts for a +0.4% gain, as well as July’s +0.6% rise. Moreover, excluding vehicles sales, Canada’s retail performance sank by -0.2% in August.
This suggests that Canadians splashing out on cars and other automobiles was partly responsible for propping up Canada’s retail sales over the Summer.
That said, even though Canada’s retail sales fell in August, Canada’s central bank, the BoC, looks unlikely to cut interest rates below their current 1.75% for the time being.
If so, this would mark a clear contrast with the US Federal Reserve, which looks set to reduce borrowing costs next week, to 1.5%-1.75%, and the ECB, which is also looking for ways to further ease monetary policy.
In turn, Canada’s higher interest rates could encourage investors to buy CAD-denominated assets, for higher returns, thereby frequently affecting the value of the loonie.
Absolutely brilliant service, in particular special thanks to Mr Daniel Wright, who literally took care of us throughout the whole process (we are both pensioners)… we entrusted our life savings to him, and don’t regret it one little bit, Daniel was incredible.
Daniel Wright was easy to deal with over the phone and very professional. It made the International transfer very quick and easy. I would definitely use them again and recommend to friends.
Daniel Wright at Foreign Currency Direct came highly recommended to us by a friend and he and the Company have lived up to this recommendation with every transaction they have completed for us.
It’s a tad daunting and scary to change currency with a hitherto unknown company, and I was worried about it beforehand. My fears were unfounded: I can assure you that this firm is genuine and does exactly what they say they will do. Daniel Wright is a pleasure to deal.
The company gave me great confidence. A complete novice, as I am, in moving large amounts of monies around, my wonderful account manager Daniel was calm and precise in explaining the process to me. He was flexible, informative, professional, friendly. If I can recommend him to anyone then I surely will.