The uncertainty surrounding the NAFTA agreement continues to have a negative impact on CAD exchange rates. With the expected interest rate hike in May now looking less likely, this market report discusses how this could affect the Canadian Dollar in the coming months. The table below shows the difference in CAD you could have achieved when buying £200,000.00 during the high and low points of trading yesterday.
|Currency Pair||% Change||Difference on £200,000|
The Loonie (Canadian Dollar) has been coming under pressure in recent weeks mostly owing to fears that amendments to the NAFTA agreement could negatively impact Canada’s economy.
These fears reached their highest levels yesterday after Stephen Poloz, the governor of the Bank of Canada gave a bearish speech and alluded to the potential for the BoC (Bank of Canada) to raise interest rates at a slower pace than many are expecting.
The Pound to Canadian Dollar rate gained by almost a percentage and a half at its highest point (1.35%) yesterday, meaning that a 200,000 CAD purchase was £2700 cheaper yesterday afternoon than when currency markets opened on Tuesday morning.
Poloz also concerned CAD bulls (those expecting CAD to strengthen) when he questioned whether the Canadian economy is close to full employment. He also highlighted the lack of youth participation in the labour market as a particular issue.
The BoC hiked rates in January to 1.25%, which was the third hike in the past nine months at the time. Over the past few weeks comments from Trump along with CAD instability have dropped hopes of another rate hike in May, which is why we’re seeing the Loonie drop in value.
There is a quiet end to the week in terms of Canadian data, although like we saw yesterday there doesn’t need to be a specific news release to see CAD exchange rates fluctuate.
The Pound to CAD rate went through 1.80 and consolidated above this mark for the first time since before the Brexit vote yesterday, and GBP/CAD is up by over 7% so far this year.
If you’re planning on making a currency exchange between the Pound and CAD, do make us aware as the pair are mostly driven by politics in the current climate and I don’t expect this to change anytime soon.
For more information on how future data releases could affect your currency requirement, call our trading floor on 01494 725 353 or email me here.
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