The Canadian Dollar has been swinging wildly today with multiple forces acting on the ‘Loonie’ due to current events and future expectations.
Initially, the announcement of a 2.5% increase in oil prices following slowed drilling in the US was enough to bolster the Canadian Dollar by more than a cent against Sterling and GBP/CAD rates fell to 2.045. USD/CAD also took a hit down to 1.318.
However, there was also weakness for the CAD on most currency pairings as we await the speech this evening by Stephen Poloz, the Governor of the Bank of Canada on the current state of the economy. There is a lot of uncertainty as to what tact he may take, hence the lack of confidence in the Canadian Dollar. Usually markets have a fairly good idea on how Central Bank Governor’s will approach their speech and what picture they will look to paint.
Poloz has previously indicated that the low value of the Canadian Dollar was key to keeping the economy running and their exports competitive in a world of weak global growth. His previous speeches have indicated future interest rate cuts and potential Quantitative Easing to keep CAD value low and some are expecting a similar negative tone.
However, with an election on the horizon, representatives of the Government’s financial institution usually take on more pressure than normal to present a positive view of the economy. The recent run of a budget surplus may be talked up more than normal and strengthen the Canadian Dollar.
Though it seems 50/50 on how the speech will be delivered and received by the markets, but the uncertainty itself is enough to cause the Canadian Dollar to weaken slightly until markets get a clearer picture on where Canadian financial policy will focus for the next months and the thoughts of the man behind the steering wheel.
Should you wish to move ahead of this event to avoid any risk on your transfer, feel free to email me on [email protected] to receive a competitive quote on your transfer. Whether you are looking to buy are sell CAD in the short term I am happy to offer my thoughts on any transfer you will require in the short-term.