The losses were slight but widespread. Most were expecting a rise in crude oil prices yesterday as crude oil stocks had dropped for an 8th week in a row, suggesting a removal of the oil glut and an increase in demand. However, this was matched by record output in the U.S of 9.6m barrels per day. So while the U.S. market was increasing it seems they will likely be buying their own stock rather than adding to demand for the overseas markets, which is why oil prices tumbled once again back down to $59.70 for Brent.
The consensus is that for companies and nations to make any discernible profit in the oil sector – prices need to be at $70 per barrel. So the Canadian Dollar lost out today on the currency markets, and there is still a long journey ahead if they wish to recover from these 7 year lows for GBP/CAD rates. Markets, however, do tend to move ahead of actual events. As soon as the oil price starts ticking up, the rates will move violently.
For example, simple rumours that sanctions would not be lifted with Iran due to deteriorating nuclear disarmament talks, which meant that the oil market would not be glutted further with their own production, raised oil prices by 2 cents at the start of the week. This is why the Canadian Dollar is one of the more volatile currencies because oil prices are a commodity which is extremely sensitive to political events.
With oil prices still at record lows there is only really room for their value, and that of the Canadian Dollar, to move up.
In the short term – Governor of the Bank of England Mark Carney will be speaking today at the ‘Inclusive Capitalism’ conference. Carney talks about all facets of the UK economy in this time, with comments ranging from outright praise to damning criticism. Today will be an extremely volatile afternoon starting from 15:45, it will be hard to predict how Sterling’s strength, and therefore GBP/CAD rates will be affected. If I had Canadian Dollars to buy, I would be looking to move before this, you do not want an unpredictable situation when the returns on a transfer are already so substantial. Call 01494 787 478 for further tailored advice to your situation and a free quote on your transfer. Those with CAD to sell, I believe there is little to risk in waiting until next week if your time-scale permits you to.