Canadian Dollar (CAD) at Multi-Year Lows
With commodity currencies feeling the strain as oil prices tumbled, the Pound Sterling to Canadian Dollar (GBP/CAD) and US Dollar to Canadian Dollar (USD/CAD) exchange rates were trending higher.
The Canadian Dollar (CAD) has been struggling all week as a result of the drop off in the price of the nation’s main export.
The ‘Loonie’ was offered a slight reprieve in the form of an improvement in the Royal Bank of Canada’s Manufacturing PMI (which climbed from 53.5 to 55.3) but a dovish statement from Bank of Canada Governor Stephen Poloz wiped out the currency’s advance.
Concerns regarding the slowing pace of Canadian growth and positive US data saw the US Dollar to Canadian Dollar (USD/CAD) exchange rate achieve a five-year high.
Although analysis is indicating that the ‘Loonie’s losses may have been excessive, the currency’s bearish trend looks set to continue.
Canadian Dollar to Fall to £1.15 by Year’s End
That being said, the Canadian Dollar was able to moderate its decline slightly and industry experts now envisage the asset trading in the region of 1.12 – 1.13 Canadian Dollars for a period before drifting to 1.15 before the end of the year.
In the view of forex expert Matthew Perrier; ‘We see potential for near-term pullback as short-term valuations get overstretched. The weaker CAD outlook is underpinned by a generally strong US Dollar outlook, with the US having finished tapering and focus shifting to the timing of the first rate hike.’
The Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate was unable to benefit from underlying weakness in the ‘Loonie’ as demand for the Pound was undermined by disappointing UK House Price figures.
The Pound fell to an almost one-year low against the US Dollar and was weaker against most of its currency counterparts as a result of a report showing that house prices fell by 0.4% in October from September.
As commented by currency strategist Neil Mellor; ‘There are still clear downside risks to Sterling. Now we have a slower housing market, no end in sight to the compression in real wages and there is no inflationary pressure out there. There are fewer reasons now than there have been all year to start thinking about raising rates.’
GBP/CAD, USD/CAD Exchange Rate Movement Forecast
With the Bank of England interest rate decision looming and Canada set to publish Building Permits figures/ the Ivey Purchasing Managers Index, Pound Sterling to Canadian Dollar exchange rate movement can be expected.
Building Approvals are believed to have increased, but if the Ivey PMI declines as expected the GBP/CAD exchange rate may advance before the close of the local session. The UK NIESR GDP estimate for October will also be of interest. Confirmation that UK growth is slowing would be damaging for the Pound.
The US Dollar to Canadian Dollar (USD/CAD) exchange rate could be affected by US Continuing Claims and Initial Jobless Claims figures.
Pound Sterling to Canadian Dollar Declines after BoE Decision
In the aftermath of the Bank of England’s interest rate decision, the Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate fell to a low of 1.8159.
As forecast, the BoE left interest rates unchanged and fiscal policy unaltered.
Later in the day the Canadian Dollar managed to stave off declines as Canada’s Ivey Purchasing Managers Index fell from 58.6 to 51.2 in October. The index now resides just above the 50 level separating growth from contraction.
Canada’s building permits report surprised to the upside, showing an increase of 12.7%.
The GBP/CAD exchange rate was trending in the region of 1.8128.
Pound Sterling to Canadian Dollar (GBP/CAD) Steady before Jobs Stats
Prior to the publication of Canada’s employment figures, the Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate was trending in a narrow range.
Today’s report is expected to show that the Canadian economy lost 5,000 positions in October following an increase of 74,100 in September.
This would see the unemployment rate rise from 6.8% to 6.9%. If that proves to be the case the Canadian Dollar could slide, leading to GBP/CAD and USD/CAD gains.
Canadian Dollar (CAD) Boosted by Jobs Gains
Canada’s employment report shocked investors and helped the Canadian Dollar advance on Friday. The Canadian economy was shown to have added 43,100 positions in October, taking the unemployment rate from 6.8% to 6.5%.
The Pound Sterling to Canadian Dollar (GBP/CAD) and US Dollar to Canadian Dollar (USD/CAD) exchange rates both fell after the data was published.
In the opinion of currency strategist Camilla Sutton; ‘It’s just given reason for the market to rethink the outlook for the Canadian economic backdrop as well as the Canadian Dollar. The combination of a weak Canadian Dollar with a strong US recovery has some benefits to Canada. The economic backdrop is not as miserable as some had expected.’
The US Non Farm Payrolls report, on the other hand, came in below expected levels, causing some US Dollar weakness and aiding CAD/USD gains.
