Timothy Lane spoke yesterday and insinuated that had it not been for Trump's trade tariffs announcement, the BoC would have been in a position to raise interest rates. This Canadian Dollar report discusses how global factors as well as economic data affects interest rates. The table below shows the difference in Canadian Dollars you could have achieved when buying £200,000.00 during the high and low points during the past month.
|Currency Pair||% Change||Difference on £200,000|
The Bank of Canada decided to keep interest rates on hold at 1.25% earlier this week, and yesterday saw the first of its’ new ‘economic progress reports’, designed to provide more clarity sooner after every policy announcement. The new initiative was implemented after Governor Stephen Poloz had been scrutinised for not being clear enough, so within a day or two after each announcement, a member of the bank will explain decisions in order to prevent market volatility from guessing reasons behind decisions made.
Timothy Lane, deputy Governor of the BoC, said that the bank would have been ready to raise rates, but the unpredictability around President Donald Trump’s decisions on global trade prevented them from doing so. The speech was largely positive about the Canadian economy, stating that business investment is growing, however unemployment remains higher than they’re comfortable with, and that interest rates will likely remain the same for the foreseeable future. The latest set of unemployment figures will be released this afternoon, and as this is being closely monitored by the BoC, if these figures are worse than the 5.9% expected, we could see GBP/CAD move back towards the 1.80 mark.
The Canadian Dollar strengthened against the Pound and US Dollar yesterday following from the news that Donald Trump will impose tariffs on aluminium and steel imported into the US in the next 15 days, as Canada and Mexico will be exempt from said tariffs for the time being, while the North American Free Trade Agreement is in place. Trump is still threatening to terminate the agreement unless a ‘fair deal for the US’ can be reached, which leaves Canada at the mercy of the US and could potentially be extremely damaging for the Canadian economy. Any signals that the NAFTA agreement would be terminated could cause the Canadian Dollar to weaken significantly, and clients with CAD exposure should keep in touch with their Account Manager at Foreign Currency Direct, so that we can keep you informed of market movements.
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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