Ongoing talks surrounding the NAFTA agreement are already taking their toll on CAD. There is a risk of the agreement breaking down altogether, which would spell bad news for Canada, being heavily reliant on exports to the US. The below table shows the difference in Canadian Dollars you could have achieved when buying £200,000.00 at the high or low points of the past 30 days.
|Currency Pair||% Change||Difference on £200,000|
The Canadian Dollar has struggled against the Pound during 2018 so far, with the breakdown in the NAFTA (North American Free Trade Agreement) creating a lot of uncertainty for the Canadian economy, much in the same way that the Brexit situation has weighed on the UK economy.
Since the beginning of this year the CAD has dropped by more than 4% against the Pound, resulting in a gain for anyone selling Pounds to buy Canadian Dollars of as much as 15,800 CAD on a sale of £200,000.
Donald Trump insisted at the end of last year that the deal be re-negotiated as he felt that the US manufacturing industry was suffering from a lack of jobs in the US. the talks are still ongoing to renegotiate the deal, and whilst there is still uncertainty over when an agreement will be reached I feel the CAD will struggle as the Canadian economy is heavily reliant on its exports to the US and if there is no trade agreement then this could result in the US importing their goods from other nations which could weaken the Canadian economy and therefore the CAD.
There was some optimism for the CAD on Friday however as Brent Crude oil prices showed a sharp rise having fallen last week due to an increase in supply in the US. The Canadian economy is heavily reliant on its exports of Crude Oil and an increase in prices is seen as a positive for the economy and therefore the value of the Loonie.
Looking ahead to this week and on Thursday and Friday there are a number of data releases due out from Canada that have the potential to affect the value of CAD. Retail sales data for December is released at 13.30 on Thursday. This should give a good insight in to how the economy is performing. If there is any deviation from the expectation then this could see swings in the CAD's value.
On Friday we have Inflation figures for January. At their last meeting in January the BoC raised rates to 1.25% and there are further hikes expected throughout this year in an attempt to keep pace with the bullish outlook for the US. BoC rate setters will be looking for a steady rate of inflation with no sharp falls if they are to continue to raise rates throughout this year, therefore these figures are worth keeping an eye on as they could determine future monetary policy.
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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