With the Canadian Government becoming only the second country to legalise the use of recreational cannabis yesterday, you would have been forgiven for expecting the CAD to be flying high as a kite. Unfortunately for CAD sellers that is not the case however, with GBP/CAD rising to a near two-month high during yesterday’s trading. The table below shows the range of exchange rates during the past 30 days, and the potential difference in returns you could have achieved when selling £200,000.00 during the high and low points.
|Currency Pair||% Change||Difference on £200,000|
This fall in the Loonie’s value has largely been attributed to the ongoing trade rows between US and China, the uncertainty of which has been sending shockwaves through financial markets this week. As a commodity currency, the CAD will often weaken in times of global uncertainty and volatility, hence the Loonie’s recent woes.
There was some good news for the CAD yesterday however, with the price of Crude Oil, their largest export, rising yesterday by over 1% after reports of a drop in output from Libya. Having said that, if the rows between the US and China continue to escalate and if the North American Free Trade Agreement talks continue to falter we are likely to see the CAD continue to suffer and a move for GBP/CAD towards 1.80 may not be out of the question.
There is a raft of economic data set to be released from the Canadian economy tomorrow including retail sales figures and inflation data. Retail sales for April are set to show a huge decline for April compared to March and inflation data for May is also set to show a decline. If this is the case then it is highly likely that we could see the CAD’s recent losses compounded further and therefore any clients looking to sell CAD may be sensible to contact their account manager here today to put a plan in place to protect your position from any further losses. If inflation data disappoints this also makes the chances of an interest rate hike at the Bank of Canada’s next interest rate decision in July slim, which could heap further pressure on the Loonie.
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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