It was released yesterday that the Canadian economy grew by 3.5% in the third quarter of this year, and the second quarter figure was revised up from -1.6% to -1.3%. This shows signs that the economy has been improving since oil exports returned to normal after the wildfires in Alberta struck back in May.
Yesterday, OPEC (The Organisation of the Petroleum Exporting Countries) made a breakthrough agreement to cut the production of oil for the first time in eight years. This is in an attempt to raise the price of oil which has been supressed for the last two years due to over-supply. A cut of 1.2 million barrels a day will take place from January, and Russia (who are not part of OPEC) have also agreed to cut production.
This news is hugely important for commodity based currencies such as the Canadian Dollar as the economy is heavily reliant on strong oil prices to remain stable due to this being Canada’s biggest export.
Although the agreement will be positive in the longer term for the CAD, Sterling actually outperformed during yesterday’s trading session, making a 200,000 CAD purchase £1,250 cheaper if timed correctly. Sterling has been performing well against its major counterparts of late, owing to positive UK economic data, but it may not be long until the new price of oil impacts the CAD making it more expensive to buy.
Manufacturing data for the UK and Canada will be released today at 10.30am and 3.30pm respectively, and tomorrow will see the release of Canadian employment data. Each release has the capability of creating swings on GBP/CAD rates, combined with the potential for CAD strength from higher oil prices. If you are looking to purchase Canadian Dollars in the coming weeks, it may be wise to move sooner rather than later to take advantage of the current levels.
To understand more on how the price of oil could impact your Canadian Dollar buying or selling requirement, speak with our team today on 01494 725 353 or email me at firstname.lastname@example.org.
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