There is mounting speculation the Bank of Canada will be looking to cut interest rates on the 7th December at their next meeting. There is a speech today by Governor of the Bank of Canada Stephan Poloz. Poloz’s speech will be closely watched for signals this will be their intention but it is outside of UK business hours taking place very late this evening. Therefore if you have a GBP/CAD requirement making some plans today is sensible. Low
Oil prices are a factor in all of this since the Canadian economy relies heavily on Oil exports and the price of Oil whilst recovered from the lows of $30/barrel earlier this year are significantly below the $100/ barrel averages of the last few years. It seems likely a rate cut could be on the cards in Canada so if you need to sell the Canadian Dollar for Pound Sterling moving sooner rather than later might be best.
It is not just interest rate concerns weighing on the Loonie dollar but the price of Oil itself. This week is a very important one for the Canadian Dollar and I would not be surprised to see GBP/CAD rise above 1.70. GBP/CAD rates have spent the last two months trading between 1.60 and 1.70 although this week’s OPEC (Organisation of Petroleum Exporting Countries) meetings could change all of that. With a meeting today in Vienna designed to limit production looking unlikely to reach agreement the Canadian dollar should remain weak. Oil represent 20% of Canadian exports and whilst Canada is not part of OPEC, the actions of OPEC influence Oil prices which in turns shapes Canadian dollar exchange rates. There is then a further meeting on Wednesday for OPEC where it was previously expected the agreement would be made.
Other important data to be aware of this week is the latest GDP (Gross Domestic Product) GDP data on Thursday and Unemployment data due Friday afternoon. With lots of pressure on CAD we could see some good opportunities to buy the Canadian Dollar although any surprises could see some shock market reaction. For example any signs OPEC will reach agreement or for Poloz to highlight he will not be looking to cut rates soon could see the CAD snap back.
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