At a time where GBP has been under constant pressure against almost all major currencies due to Brexit uncertainty The Bank of Canada kept the benchmark overnight interest rate unchanged at 0.5% in their last review on Wednesday. However, meeting notes suggest they are willing to cut interest rates in the near future if it is deemed as necessary. This dovish tone gave GBP the rare opportunity to strengthen, off the back of the news rallying to 1.645, 2 week highs against the CAD. A £200,000 transfer, if timed correctly between the highs and lows this week could have gained you an extra $14,000.
It may be advisable for those with a CAD requirement to keep in regular contact with your broker here at Foreign Currency Direct as I believe the stance taken by Donald Trump in his address today at 5pm – GMT - will have a direct impact on the direction CAD is likely to head in the short term due to the simple mater of US being the biggest single export destination for Canadian exports - 74% or $331bn last year alone.
In my opinion there are two possible scenarios:
Firstly, if Donald Trump’s primary aim is to keep USD rates low in order to boost exports and rectify the trade deficit we shall see the Loonie strengthen.
Secondly, if Donald Trump’s primary aim is to stimulate the economy through increased government spending we may see the US economy start to heat up, resulting in possible FED interest rate hikes, strengthening of the USD as investors flock to gain from the higher returns and thus weakening of the Loonie.
This afternoon at 13:30pm we see the Canadian consumer price index for December, a key gauge for inflation alongside total retail sales being released.
For further forecasts around the Canadian Dollar, why not speak to one of our experts? Call us on 01494 725 353 if youd like to talk to someone about a transfer.
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