Although Italy managed to sidestep a political explosion as Italian Prime Minister Enrico Letta won his confidence vote, the political situation in the US remains unresolved and is provoking currency-shifting concern among investors.
With no end to the partial Federal shutdown in sight, the commodity-driven Canadian Dollar continued weakening against counterparts like the Pound and US Dollar.
The Canadian Dollar Exchange Rate was in the region of 0.5971 against the British Pound as of 14:45 GMT
For the first time in 17 years the US government has had to close a significant portion of its operations as lawmakers failed to reach an agreement concerning the nation’s budget. As a consequence, hundreds of thousands of people have been sent home from work without pay and the threat to US growth has grown.
With blame for the situation shifting from one side to the other, no mediating talks scheduled and the deadline for US debt ceiling looming, Canada’s trade prospects are dimming and the nation’s currency is sliding as a result.
Before the shutdown occurred President Obama asserted that the situation would ‘throw a wrench into the gears of our economy at a time when those gears have gained some traction.’ He added that the American people have ‘worked too hard, for too long to recover from previous crises just to have folks here in Washington manufacture yet another one that they have to dig themselves out of.’ And yet neither side seems prepared to give way to the other.
The CAD/GBP exchange rate hit a low of 0.5952
As the US is the world’s largest economy, a worsening of its fiscal crisis could have a considerable knock on effect, particularly for nations like Canada which rely so heavily on the US for trade.
As Toronto-based forex expert Blake Jespersen comments, there’s a bit of ‘weakness in the Canadian Dollar. There’s a little bit of movement now, but still confined to very narrow ranges. But much of that is related to the US government shutdown.’
Although this latest drama has dented the odds of the Federal Reserve tapering stimulus before the close of the year, a factor which would typically weaken the ‘Greenback’, with investors remaining wary of higher-risk assets in the face of all this uncertainty the safe-haven US Dollar has been supported.
The CAD/GBP pairing’s bearish relationship wasn’t helped by a report showing that the UK construction sector expanded for a fifth month.
As the week progresses, global (and particularly US) developments will continue to dictate market movement.
The ‘Loonie’ could also extend declines against the Pound if tomorrow’s UK services PMI holds at 60.5, as economists expect.
Current Canadian Dollar (CAD) Exchange Rates:
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The Canadian Dollar/US Dollar Exchange Rate is currently in the region of: 0.9671 <
The Canadian Dollar /Euro Exchange Rate is currently in the region of: 0.7116 <
The Canadian Dollar/Pound Sterling Exchange Rate is currently in the region of: 0.5971 <
The Canadian Dollar/Australian Dollar Exchange Rate is currently in the region of: 1.0338 >
The Canadian Dollar /New Zealand Dollar Exchange Rate is currently in the region of: 1.1730 >
The Pound Sterling/Canadian Dollar Exchange Rate is currently in the region of: 1.6804 >
The US Dollar/ Canadian Dollar Exchange Rate is currently in the region of: 1.0341 >
The Euro/Canadian Dollar Exchange Rate is currently in the region of: 1.4052 >
The New Zealand Dollar/Canadian Dollar Exchange Rate is currently in the region of: 0.8514 <
The Australian Dollar/Canadian Dollar Exchange Rate is currently in the region of: 0.9672 <
(Correct as of 14:45 GMT)
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