The big event for the Canadian Dollar this week will be the interest rate decision by the BoC, rates are expected to remain on hold
A report last week estimated that the wildfires which caused oil sand production to be halted due to the evacuation and closures of production units would have cost 1.2 million barrels of oil a day for two weeks. Analysts have predicted that this is likely to equate into 0.06% of total GDP for Canada. Over the weekend, cooler weather helped the firefighters to push back some of the blaze, however crude oil production is rising. Oil prices have been on the rise since February this year, after it was announced that the global surplus will ease.
It was yesterday announced that Iran may pump its production to 2.2m barrels of oil a day, and with the production plants in Alberta eager to start up again, the price of oil is likely to drop again. As the CAD is a commodity based currency and is very heavily linked to the price of oil, generally speaking as the price of oil drops, so does the Canadian Dollar.
This week, Canada announces its decision on whether to raise, keep or lower its base rate. Any interest rate decision has the ability to cause volatility on the market, and with the recent natural disasters in Canada likely to have a profound effect on the Canadian economy, this is likely to stop the Bank of Canada raising rates whilst it tries to recover from this. Rates are expected to be kept on hold, however if there is any deviation from what is expected, then we could see volatility on GBP/CAD.
Thank you for reading my Canadian report today, in the event you have Canadian Dollars to purchase or sell, give us a call on 01494 725 353 so we can get the best exchange rates for you.
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