An interesting day for the Canadian Dollar unfolded as we got a lesson in how interconnected the currency markets are. Single events in distant countries can have as strong an affect on Canadian Dollar rates as those right on the country’s doorstep in the US.
Today the amount of people claiming jobless allowance in the US were shown to have increased by 30,000 last month, and the amount of new jobs added the economy came in lower than expected. Poor data in the US, due to the intimate trading relationship between the two economies, reflects poorly on the Canadian Dollar as well, driving down the value of the Canadian Dollar on the markets.
However, this was balanced out by positive manufacturing data releases in the Canadian economy. Since the sustained fall in oil prices at the start of the year, the economy has been forced to diversify, and a huge amount of investment that has been pulled out of that sector and reinvested in manufacturing is already beginning to tell. This is permitting a bit more confidence to return to the Canadian economy after a shaky start to the year.
Furthermore, positive news on Greek talks with their European and international creditors have caused much of the capital flying into safe haven currencies, such as the Pound, to cease. So GBP/CAD rates fell today as much of the artificial strength in Sterling was deflated from people returning to the Euro with more confidence.
I expect their to be some form of deal agreed with Greece in the next few days. I think it is unlikely to be a full bailout, but the debt ceiling may be raised to bring some much needed liquidity back to Greek banks. So expect GBP/CAD rates to fall further off the back of this. We have already moved down to 1.95 again today, so these 7 year highs will likely only be available for a short period. Email me overnight on [email protected] to discuss your requirements and receive tailored advice on how to maximise the value of your Sterling, or how to do the same with your CAD within a given period while the market is ‘down’.