As US lawmakers clash over forming an agreement which would end the Federal shutdown and eliminate the risk of a default, speculation that a positive announcement will be made in the next few hours boosted the ‘Loonie’ as the local session got underway.
The Canadian Dollar Exchange Rate was in the region of 0.6015 against the British Pound as of 14:45 GMT
Although negotiations have been lumbering on for days, with few signs that either side intends to back down, investors believe an agreement is forthcoming simply because the alternative could have repercussions too serious to contemplate.
If the world’s largest economy defaults in 24 hours time the fiscal backlash could be cataclysmic on a global scale, so although the House Republican’s last-minute plan failed Senate leaders are determined to hash out a more workable plan.
The US government has been locked in partial shutdown for 16 days now, denting both the US economic outlook and the trade prospects of nations reliant on it, like Canada.
Consequently, hopes that the political impasse could end helped the ‘Loonie’ advance for the first time in three days.
As Toronto-based industry expert Brad Schruder comments; ‘America is home to the Hail Mary touchdown pass, the 11th-hour deal, and all you’re seeing here is not necessarily posturing, but the creation of atmosphere for a dramatic agreement to come in at the last minute. When that deal gets done, whether it gets done before this self-imposed deadline or not, you should see the Canadian Dollar do better against the US Dollar.’
However, gains in the CAD/USD pairing were limited as Canadian manufacturing shipments declined by 0.2 per cent in August rather than gaining the 0.2 per cent forecast. This result was particularly disappointing given the previous month’s 1.7 per cent advance.
The CAD/GBP exchange rate hit a low of 0.6002
Today’s report confirms that Canada’s manufacturing sector still hasn’t returned to its pre-recession performance, as exchange rate issues and unstable global demand continue to take a roll.
Of the 21 categories monitored by Statistics Canada, 11 recorded a drop in sales.
Factory sales (excluding price changes) were down 0.3 per cent.
Before the report was published the Canadian Dollar was trading on the back foot against its British rival as the Pound broadly strengthened early in the European session in response to surprisingly upbeat UK employment news.
The CAD/GBP extended declines after Canada’s manufacturing shipments report was published and the pairing is likely to experience additional movement tomorrow as a result of UK retail sales figures.
Economists have forecast that UK sales increased by 0.3 per cent in September, month-on-month, following a decline of 0.1 per cent the previous month. If the result meets or exceeds estimates the ‘Loonie’ could continue softening against the Pound ahead of this week’s Canadian inflation data.
Before the close of the North American session US announcements (or a lack thereof) will be responsible for notable market volatility.
Current Canadian Dollar (CAD) Exchange Rates:
< Down > Up
The Canadian Dollar/US Dollar Exchange Rate is currently in the region of: 0.9652 >
The Canadian Dollar /Euro Exchange Rate is currently in the region of: 0.7123 <
The Canadian Dollar/Pound Sterling Exchange Rate is currently in the region of: 0.6015 <
The Canadian Dollar/Australian Dollar Exchange Rate is currently in the region of: 1.0120 >
The Canadian Dollar /New Zealand Dollar Exchange Rate is currently in the region of: 1.1544 <
The Pound Sterling/Canadian Dollar Exchange Rate is currently in the region of: 1.6596 <
The US Dollar/ Canadian Dollar Exchange Rate is currently in the region of: 1.0361 <
The Euro/Canadian Dollar Exchange Rate is currently in the region of: 1.4042 >
The New Zealand Dollar/Canadian Dollar Exchange Rate is currently in the region of: 0.8679 >
The Australian Dollar/Canadian Dollar Exchange Rate is currently in the region of: 0.9880 <
(Correct as of 14:45 GMT)
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