Oil prices - one of Canada's largest exports could be set to rise if OPEC can finally cut a deal to reduce production levels. Could now be a good time to buy the Canadian Dollar? The below table provides GBP/CAD exchange rate movements for the last three months.
|Currency Pair||% Change||Difference on £200,000|
Loonie buyers would have been hoping for Sterling to break through the 1.80 mark as momentum appeared to be building with the Pound. Instead we have seen a volatile week with rates jumping between 1.762 and 1,783, oil price movement, financial instability in Canada and more recently poor economic data from the UK the key factors. In monetary terms, that spread represents a difference of £1,300 on a $200,000 transfer and just highlights the importance of being kept up to date with the current trends in the market.
Basing their predictions on OPEC’s suggestions that oil production cuts will continue throughout 2017, Japanese financial holding group Nomura see the value of the Loonie rise long term. With oil being Canada’s largest export, a sustained rise in Oil prices should provide the commodity based Loonie with some much-needed support. The Bank of Canada released a statement yesterday supporting this, suggesting that global energy prices remain relatively low compared to averages since 2014 and as such there is plenty of potential for the Loonie to tap into.
With CAD looking to find immediate short term support amidst growing pressure owing to trade disruptions with the US, ratings agency Moody’s did very little to drive investor appetite by downgrading their credit rating for 6 of Canada’s major banks. Moody’s justified their decision claiming the low levels of liquidity supporting household lending in Canada has put the country’s banks at greater risk. With new house sales figures in Canada showing a slowdown in the market yesterday evening it will be interesting to see how the markets react to the news.
If you are looking to buy CAD it may be wise to capitalise on the uncertainty surrounding the Loonie at the moment. Next Thursday sees the release of a raft of retail sales and consumer price levels. With inflation levels reasonably well controlled in Canada for the time being, they may provide the Loonie with some support. Why not get in touch with your account manager here who can help you plan around these events. Call us on 01494 725353.
The information on this web site is provided free of charge for information purposes only. It does not constitute advice to any person on any matter. Foreign Currency Direct plc. ("FCD") makes every reasonable effort to ensure that this information is accurate and complete but assumes no responsibility for and gives no warranty with regard to the same.
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