Last week the Bank of Canada raised interest rates from 1.25% to 1.5% - the hike was anticipated and there was no significant CAD strength following the announcement. The CAD report below looks into the factors supporting CAD at the moment despite ongoing NAFTA discussions. The table below shows the difference in CAD 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|
It is a welcome plus for the Canadian economy at a time when uncertainty around the future of NAFTA is a concern. Trump has long made his intention - to negotiate individual trade deals with Canada and Mexico – clear.
Following the interest rate decision, a BoC (Bank of Canada) spokesman stated after the release that exports have increased due to strong global demand and higher commodity prices, albeit concerns over trade are weighing on investment in some sectors.
It seems tax cuts in the United States are causing an increase in demand which Canadian exports are making the most of. Growth forecasts were changed to 1.8% for the remainder of 2018 and 1.9% in 2019.
The next notable release for CAD will be on Friday. We will see Canadian retail sales released by Statistics Canada and expect to see an increase in consumer confidence.
Also, we will see inflation (core CPI) data released with a higher reading of 1.4% from 1.3% expected and if confirmed, will strengthen CAD’s value. Central Banks monitor CPI releases to help guide them in their rate and policy setting. If inflation is seen to be moving beyond a certain target, then interest rate rises are used to counter this.
Until then, I expect Brexit news to affect GBPCAD, which in the last month, has been in between the low 1.73’s and mid 1.77’s. If I had to choose, I would be more confident about the Loonie than Sterling. Brexit rumours and releases look the most likely factors to influence the pair, at least until Friday.
In the last month, timing your GBPCAD transfer at the time of market highs instead of the lows could have earnt you an extra $8,466. To make similar savings this summer, get in touch with our top team of Traders. 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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