The Canadian Dollar has come under sustained selling pressure during the last three sessions in the currency market.
Foreign Currency Market Update – GBP / CAD Update
The Pound staged an impressive rally against the Canadian Dollar in the 48 hours leading up to last Friday’s market close. The forward move for GBP CAD was sustained into this morning’s European session, seeing the pair trade to 1.5943, its highest rate this year, before pulling back this afternoon. GBP CAD looks to be consolidating following the downward move which saw it drop to a 4-month low of 1.5545 on 17th January.
The past seven days have seen a paucity of Canadian data releases; the only figure of note came on Tuesday afternoon when domestic Retail Sales numbers for December showed no monthly change from November’s print. Analysts had anticipated a slight month-on-month increase, so this was bad news for the CAD. Meanwhile, there was a busier data schedule in the UK. Wednesday’s Bank of England minutes showed that two members of the nine-man policy committee had voted for a £75bn increase to the Bank’s asset purchase scheme, making further increases in the £275bn already allocated highly likely later in the year. There was further bad news for Sterling late in the week, with Friday’s release of UK GDP growth data, which showed that Britain’s economy contracted by 0.2% in the final 3 months of 2011.
*Denotes the importance of the data item *** being the highest level.
** This month’s Nationwide House Price Survey is penned in for release in the early hours of Tuesday morning in the UK. It’s expected to show an annualised increase of 0.3% in British house prices.
** February’s GfK Consumer Confidence Survey is released in the UK in the early hours of Wednesday morning – an improvement on January’s -29 figure is anticipated.
** Later on Wednesday morning comes the release of British Mortgage Approval data for January.
** UK PMI Surveys for January for the manufacturing and construction sectors are due for release on Thursday and Friday respectively. Both are expected to show a slight weakening off from December’s figures.
** Thursday afternoon sees the release of Canadian Balance of Payments data for Q4 – an improvement on Q3′s –CAD$12.1bn number is anticipated.
*** Canadian GDP growth data for December is due for release on Friday afternoon. The key number is expected to show that Canada’s economy grew by an annualised 1.8% in Q4 2011, down significantly from Q3′s 3.5%.
The Canadian Dollar has come under sustained selling pressure during the last three sessions in the currency market. The move has been caused by fears over the effect that the recent sharp rise in global crude oil prices will have on the US economy. For geographical reasons, America remains Canada’s key export partner and the Canadian economy remains heavily dependent on exports of crude oil to the US, for its continued well-being. An economic slowdown in the States would be extremely bad news for Canada, so weak economic data releases from the US have the potential to hurt the CAD. If the price of crude remains high and US data releases suggest that this is harming the US economy, then a break back above 1.6000 is possible for GBP CAD. Conversely, if Friday’s Canadian GDP growth data beats expectations and the price of crude eases, then last month’s key interim floor of 1.5545 will become a near-term target for the pair.
- The Pound tested lower against the Canadian Dollar during last week’s session
- Pound Sterling to Canadian Dollar Foreign Currency Exchange Rate Forecast – The Canadian dollar had a good week
- The Pound has been down on its luck against the Canadian Dollar for the past month or more
- Pound Sterling to Canadian Dollar Foreign Currency Exchange Rate Forecast – CAD rallies on gold surge
- Pound Sterling to Canadian Dollar Foreign Currency Exchange Rate Forecast – Sterling Rebounds from Technical Support