Canadian Dollar (CAD) Exchange Rate Forecast
On Tuesday the Canadian Dollar slumped to a six-month low against the US Dollar as investors reacted to Canada’s lacklustre growth report. The ‘Loonie’ lost 0.4% against the ‘Greenback’, taking its losses for the month to 3%.
Economists forecast that the Canadian economy expanded by 0.3% in July on a month-on-month basis, but it actually stagnated. This took the pace of annual expansion down from 3.1% to 2.5%.
Separate Canadian figures showed that Canada’s Industrial Product Price index also stagnated in August rather than sliding the -0.2% expected.
The nation’s Raw Materials Price Index dropped by -2.2% on a month-on-month basis, a steeper drop than the -1.5% decline predicted.
The data and the Canadian Dollar’s subsequent fall saw currency strategist Camilla Sutton state; ‘What we had was a disappointment and some signs that the third quarter is off to a softer-than-expected start. From a currency perspective, that has proven a weight.’
Later today the Canadian Dollar could experience movement as a result of the Royal Bank of Canada’s Manufacturing PMI. The gauge came in at 54.8 in August, well above the 50 mark separating growth from contraction. Another positive print could help the ‘Loonie’ recover losses.
The Canadian Dollar also softened against the Pound, with the GBP/CAD exchange rate pushing to a high of 1.8186 over the course of the European session.
Indian Rupee (INR) Exchange Rate Forecast
The US Dollar to Indian Rupee (USD/INR) exchange rate rallied to a high of 61.9250 on Tuesday even as the US Consumer Confidence gauge fell to a four-month low.
Expectations for a Federal Reserve rate increase, the ongoing geopolitical crisis in the Middle East and India’s economic outlook all contributed to a weaker Rupee and the emerging market currency has now posted its most extensive quarterly decline for 12 months.
Last week’s upwardly revised second quarter growth report for the US led to investors bringing forward their timelines for the US increasing borrowing costs and the US Dollar accordingly continued its bullish run.
Although the ‘Greenback’ pared some of these gains on concerns the currency had been overbought and a below-forecast US pending home sales report, the USD/INR exchange rate was trending higher following the Reserve Bank of India’s interest rate decision. The central bank opted to leave interest rates on hold, as economists predicted. It was the fourth meeting at which the RBI left interest rates unchanged and Governor Raghuram Rajan once again highlighted the nation’s inflation risks.
In the opinion of currency strategist Hamish Pepper; ‘Much of the recent Rupee weakness has reflected Dollar strength and a pick-up in foreign-exchange volatility, reducing risk-adjusted interest-rate differentials. However, material Rupee depreciation remains unlikely [because of] relatively low inflation and enhanced RBI policy credibility.’
As well as sliding against the US Dollar, the Rupee fell against the Pound with the GBP/INR exchange rate rallying to a high of 100.4820.
India’s HSBC manufacturing PMI may be the cause of Rupee exchange rate movement in the hours ahead.
