The Loonie is struggling of late with the ongoing NAFTA trade agreement slowing CAD progress for months. As a commodity based currency the Canadian Dollar is also feeling the effects of the current price of oil, which has fallen by $5 over the past month. This market report looks at the factors currently in play affecting the Canadian Dollar and the outlook for CAD buyers in the medium term. The table below shows the difference in Canadian Dollars you could achieved when buying £200,000.00 during the high and low points of the past month.
|Currency Pair||% Change||Difference on £200,000|
The North American Free Trade Agreement (NAFTA) has been limiting upside movement for the Canadian Dollar for a few months now, as US President Donald Trump is still considering reforming the arrangements.
The current NAFTA agreement has been in place for over 30 years and is inevitably likely to result in uncertainty for the countries involved. With the world’s second and fourth largest countries by area facing this uncertainty it’s been no surprise to see the underlying currencies involved weaken.
The Finance Minister, Bill Morneau met up with private-sector economists in Toronto last week to discuss this matter along with the Budget which will take place next Tuesday. With key figures planning around potential changes I think this topic is something our clients with a CAD requirement should consider.
The CAD to GBP rate has lost 4.70% in less than two months, highlighting the uncertainty surrounding the currency at the moment. This makes a 200,000 CAD purchase £9400 cheaper than it was at the beginning of the year.
The Loonie isn’t being helped at the moment by a drop in the value of oil. Over the past month the commodity has fallen by around $5 per barrel and with oil being a key export for the Canadian economy, the correlation is expected and certainly not out of the ordinary.
Clients that would like to discuss the relationship between certain commodity prices and CAD’s value can feel free to get in touch for more information.
There is a busy end to the week for data out of Canada, so I wouldn’t be surprised to see GBP/CAD trading at a different level come the end of the week compared with its current price. There is Retail Sales data for Dec due for release at 1.30pm (0.2% expected), and then tomorrow there is inflation data due out at the same time. Do make us aware if you would like to be notified in the event of a major move.
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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