We could be in for quite an interesting start to 2019 for the Loonie, with key inflation figures and job market data due on Friday afternoon likely to drive investor appetite.

Currency Pair% Change in 7 daysDifference on £200,000
GBPCAD2%$7,000 CAD

Unlike most of its major currency counterparts, the Canadian dollar struggled to capitalise on Sterling’s Brexit woes throughout the final quarter of 2018 and now does appear to be on the back foot, with the global geopolitical landscape looking less and less favourable for commodity-based currencies like the Loonie.

More risk against reward for Canadian dollar holders?

The near 40% drop in Crude oil prices (Canada’s main commodity) over the last couple of months has been a major culprit to the Canadian dollar’s fall from grace. This combined with the US’ stand-off with China has led to quite a sizeable level of uncertainty within the markets, making investors far warier of placing their funds within volatile currencies like the CAD.

If there had been a little more clarity on the Brexit front UK side, I feel it would be quite feasible to imagine GBPCAD comfortably trading above the 1.80 mark. To put his into context, over the last 6 weeks, the Canadian dollar has conceded over 6% against the market favourite US dollar, compared to just 2.5% against the Pound. Something to consider if you are holding onto Canadian Dollars and are considering your options ahead of what could be a very volatile 2019.

The unemployment rate has consistently come out strongly this year however and has been noted as being one of the foundations of optimism from the Bank of Canada, who last week were putting a fairly negative tone on their forecasts for 2019. As a result, I would expect this release to follow on from expectations and provide a little bit of support for Canadian dollar towards the end of the week, making it more expensive to buy.


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