Tomorrow afternoon’s Bank of Canada policy decision will be closely-monitored. It would be a surprise if the BoC opted to alter interest rates, particularly given last week’s more than respectable domestic growth figures.
Foreign Currency Market Update – GBP / CAD Update
The past week has seen the GBP CAD exchange rate trading within a relatively tight range. The pair had been threatening a break back towards the low-1.50s during last Tuesday’s session, but the downside move soon reversed with the release of a significantly weaker than anticipated US Consumer Confidence survey which triggered a move out of Canadian Dollar-denominated assets. The remainder of the week brought little price action, with trading volumes remaining thin as many traders remained ‘on vacation’.
Friday’s session brought a couple of risk events of note; June’s Canadian GDP data bettered analysts’ expectations to show a 0.2% pick-up on May’s figure, provoking some support for the CAD, while US Federal Chairman Ben Bernanke’s hotly anticipated Jackson Hole speech failed to bring the pre-announcement of further Quantitative Easing in the US which investors holding CAD-denominated assets had been hoping for.
The weekend close saw the release of more disappointing data from the world’s leading industrial superpower – the latest Chinese PMI Manufacturing survey showed that activity in this key sector of China’s economy had unexpectedly contracted last month. This was bad news for the Canadian Dollar, as China remains one of the major export markets for Canada’s raw materials.
Tomorrow afternoon’s Bank of Canada policy decision will be closely-monitored. It would be a surprise if the BoC opted to alter interest rates, particularly given last week’s more than respectable domestic growth figures. However, any suggestion from BoC Governor Mark Carney in his accompanying statement, suggesting that a near-term rate hike may be on the cards, would cause a surge of support for the Canadian Dollar. This could potentially send GBP CAD back down towards July 2011′s 26-month low of 1.5250.
Summary of major upcoming data releases that we think may move the market.
- The New Zealand Dollar traded within a tight trading range against the Pound
- Pound Sterling, the Euro and US Dollar exchange rate news – The Pound remained in a tight trading range against both the Euro and the U.S Dollar
- Pound to Euro Exchange Rate Forecast: The Pound to Euro exchange rate fluctuated within a tight one-cent range
- The GBP CAD exchange rate steadily lost ground throughout last week’s session
- The GBP CAD exchange rate showed signs of a revival over the past seven days