The Canadian Dollar’s strength will be tested in the short to medium term following hawkish comments from the Federal Reserve that there are due to be 3 rate hikes during 2017, the nearest one being in March. The reason why this is likely to weaken the Loonie, is that investors will likely move their funds into the USD as they will receive higher profits than investing in the Canadian Dollar.
I believe that this has helped the Pound to regain some of its losses against the Loonie this week. Furthermore, yesterday was an overall positive day for Sterling both politically and economically. The House of Lords debate was fairly well received in all accounts and did little to throw any spanners in the works of Theresa May’s Brexit Plan.
Yesterday should have seen the Canadian Dollar capitalise on some lost ground against the Pound in my opinion. The reason for this is that crude oil prices soared in yesterday’s trading session following comments from OPEC (organisation of petroleum exporting countries) that a stable price for oil had yet to be reached. As a commodity based currency and a large exporter of oil, higher prices for oil mean a stronger Canadian Dollar.
This is yet to translate into Canadian Dollar strength due to the large stockpiles of oil reserves, however could help boost the loonies longer term if a price war takes some time to be reached.
Today, GBP rates have the capability to move higher with Gross Domestic Products figures released this morning and later on this afternoon retail sales figures will be released for Canada. Both economic releases have the capability to create volatility so vet in touch to make sure you are covered.
For further information on how economic and political events could impact Canadian Dollar exchange rates, speak to one of our experts on 01494 725 353.
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