This Canadian Dollar report will address the factors that could have an effect on exchange rates over the coming weeks. The table below looks at the difference between the rate you would have achieved in Canadian Dollars when purchasing £200,000.00 at the low and high levels during the past 30 days.

Currency Pair% ChangeDifference on £200,000
Friday’s employment data first real test for the Loonie

Canadian Dollar's value falls off the back of interest rate hike

It was widely expected that the Bank of Canada would raise interest rates yesterday and they didn’t disappoint. Interest rates were hiked from 1% to 1.25% and the Bank of Canada’s reason for the hike is because inflation is close to the Bank of Canada’s target, job creation has been solid which has led to improved spending and property investment.

The Central bank went on to state that its likely interest rates will be hiked again which is no surprise but the hikes will be data dependent.

When a central bank raises interest rates you tend to find the currency strengthens as investors flock to the currency for higher returns on their investments.

However, yesterday the Canadian Dollar actually lost ground against most of the major currencies including Sterling, as the Bank of Canada announced that they are wary of US President Donald Trump. President Trump has threatened to quit the North American Trade agreement, which is creating uncertainty and creating a slight drag on the economy.

Canadian data releases to look for

Forecasters at the Royal Bank of Canada are suggesting that the central bank could hike interest rates further this year by 0.75% over 3 hikes. Even though Canadian Dollar exchange rates dropped after the hike, I expect the value of the Canadian Dollar to improve throughout the year if this forecast becomes true. However in the meantime clients exposed to Canadian Dollar transfers should keep a close eye on the NAFTA talks that are set to resume on January 23rd, Retail Sales numbers released Thursday 25th and inflation numbers released Friday 26th.

Why does Donald Trump want to walk away from NAFTA?

The North American Free Trade agreement also known as NAFTA is an agreement between Canada, the US and Mexico and the agreement allows all three countries to trade with each other without tariffs. Donald Trump’s argument is that the US imports heavily outweigh exports due to the cheap labour in Mexico. Furthermore the President believes thousands of manufacturing jobs have been lost to the country as the deal in the words of the President is ‘the worst trade deal in history’. Reports are suggesting that it’s a matter of time until the President tries to pull out of the NAFTA agreement, however the President would have to have this new legislation passed through the Senate and since Trumps appointment this has been tricky. It’s hard to predict which way this story will end, nevertheless a cloud of uncertainty surrounds the Canadian Dollar and Canadian Dollar exchange rates. For more information feel free to contact the trading floor.

For more information on how future talks could affect your Canadian Dollar requirement, call our trading floor on 01494 725 353 or email me here.


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Exchange rates on this page are interbank rates and indicate where the market is trading to show the performance of a currency pair. They are not indicative of the rates which we offer. 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.