CAD – Calm before the storm

Gbp to Cad Exchange Rate Hits a 1-Month High as Risk Appetite Returns to Global Markets

CAD rates have been relatively stable today ahead of what is expected to be a volatile week and month as we near the interest rate decision in the US on Thursday and Canada’s election on the horizon.

The first major event to affect CAD rates will be the interest rate decision for the US. It’s too close to call. Recent data emerging from the US economy paints a strong picture. Unemployment at 5.1% certainly tops the list, but this is also occuring in a period of low inflation and a worsening global picture following China’s recent crisis.

The stock market is higher, a historical sign of corporate confidence ahead of the decision, but the FED have been relatively dovish and have skirted the issue regularly – choosing to delay rather than make bold decisions. Will the election have an effect? We will likely see clearer indicators nearer the time.

Why is this relevant to CAD? As the US’s biggest trading partner, the Canadian Dollar regularly benefits from USD strength by association. The only pairing a rate hike CAD will likely weaken against on the announcement is CAD/USD, which may see further rises in the short term.

Those with USD’s to buy will either see tempting opportunities on Thursday when the markets correct themselves with a disspointing hold on any rate rise, or see their transfer becoming even more expensive than previous movements have suggested.

To keep in direct contact over the next few days while we wait for a rate decision and any indicators about which outcome is most likely, email me on teh@currencies.co.uk to be first on the list for news and updates, as well as a free quote for your transfer.