This kind of volatility is frankly surprising. Most analysts were expecting the rates to settle down after the shock announcements dealt with on this website during Friday’s trading session. The rates are moving up because of some poor news expected this afternoon about the long-term projections of the American economy, and their trade relationship with Canada. But to move the rates up by almost two cents in a single morning of trading is disproportionate to how important this data release is frankly. Markets on the CAD must still be sensitive following Friday’s shock announcement. Expect further volatility this afternoon, and even though the post below suggests otherwise, we may still hit 1.95.
The key piece of data to be released this afternoon is the measure of Durable Goods Orders for the U.S. economy. This is essentially a measure of bulk and long-term purchases that cant be filled immediately, such as 20,000 cars or 15 Boeing Planes. As these orders take a long time to fill, those who are purchasing have to guess what demand would be like in the future. Like the whiskey maker who has to guess what demand will be like in 15 years, this is a measure of confidence in the consumer market.
Previously these Durable Goods Orders came in much lower than expected and caused significant US Dollar weakness, which had a knock-on effect on the CAD. The US is Canada’s biggest trading partner, should there be less demand in the US economy, then there is less confidence in the Canadian economy as well.
One of the reasons why this expected lack of demand has weakened CAD further this time is because Canada is trying to diversify its economy in the face of low oil prices. There has been a manufacturing boom, which has put more confidence back into the Canadian Dollar, but poor demand in the US will put question marks on this.
Call in to 01494 787 478 to discuss your requirements in Canadian Dollars over the next few months. As you can see these rates are currently incredibly volatile. If you have a GBP/CAD or EUR/CAD requirement, I would recommend calling in now to discuss your options to limit your exposure. For example, if you had transferred £100,000 this morning into Canadian Dollars before 10am, you would have achieved $1,500 less on your CAD value.