The Loonie fell into the mid 1.60’s against Sterling as it was announced the US and Canada had agreed an alternative to the NAFTA agreement. United States-Mexico-Canada Agreement (USMCA) centres heavily around the movement of car parts and the wages of those working in the vehicle manufacturing industry. More on the long awaited agreement and economic data out this week from Canada in the market report below.
|Currency Pair||% Change in 1 month||Difference on £200,000|
There was a risk that in the last few months the US and Canada may not have managed to come to an agreement, bringing an end to the 24 year NAFTA deal.
At the end of last week the GBP/CAD rate was up around 1.71 and at the trough of the low point yesterday fell below the 1.67 level. This means that selling $200,000 Canadian Dollars could now achieve around £3,500 more in return.
The improved strength of the Canadian Dollar has been fuelled lately by not only the success of a trade deal with their biggest trading partner, but also the recent surge in the price of a barrel of oil.
US President Donald Trump’s impending sanctions on Iran’s oil means markets know that in five weeks time one of the major producers of oil will be cut out the market. In my opinion this points towards further Canadian Dollar strength in the next few weeks, especially if markets panic and the price of a barrel is driven toward the $100 level.
If you’re looking to purchase Canadian Dollars in the next month even though the markets moved against you, acting sooner rather than later may protect you from further losses. Whilst there might be a little support for Sterling from any positive Brexit news, the current trend certainly suggests the Canadian Dollar strength might be around for a reasonable time.
On Thursday this week the Business Purchasing Managers Index data which surveys business confidence across Canada is released. The data for September is expected to fall slightly below the month of August, however a recording of 50 is considered positive and the forecast is 61.4 so conditions are positive.
Finally on Friday the Unemployment rate will be released and is expected to fall from 6.0% to 5.9%, this could provide the Canadian Dollar with a boost at the end of the week. If you do have an upcoming requirement make sure you’re in contact with your broker.
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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