A slump in oil prices has impacted the Canadian Dollar in recent weeks, although oil stockpiles are down which present opportunities for the economy ahead. How will next Friday's GDP figures pan out in the aftermath of the Alberta fires?
The CAD lost some ground against the Pound during yesterday’s trading, with the price of Brent Crude Oil showing more volatility. We saw a sharp drop in the price of Oil and with the Canadian economy heavily reliant on its exports of Crude Oil, this is bad news for the Loonie. There is a raft of data released from Canada today, with inflation levels the main focus. Oil prices were incredibly unstable throughout June, with vast swings in value and therefore I believe that we could see a drop in inflation figures for June which may in turn weaken the CAD.
The Bank of Canada last week kept interest rates on hold, so it will be interesting to see how they react if there is a drop in prices. There are also retail sales figures released and these are also expected to fall, so we could see the CAD under further pressure.
Looking further ahead to Friday next week, I would expect the value of the CAD to shift depending on the GDP figures released from the Canadian economy in May. Projections are currently showing a fall in the economy’s output for this period, mainly due to the Fort McMurray wildfires in May that destroyed thousands of homes and also disrupted Alberta’s Oil sands operations. As a result I would expect to see some Canadian Dollar weakness on Friday next week and a rare opportunity for CAD buyers to pounce on since the result of the referendum in June.
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