CAD rates across the board, whether USD/CAD, GBP/CAD or EUR/CAD are still remaining stubbornly low ahead of the election on Monday – I have never seen this level of apathy towards an event which will affect the country for years to come. Especially when polls are close.
There are three possible reasons for this, one of which has been touched on in earlier posts.
The recent rises in oil prices have hailed a new confidence in the CAD which had previously been causing the consistence slides on its value against its competitors. A net gain of 7% now over the past three weeks, and continued negotiations with oil producers to get prices back up to economically viable levels is being received well by markets.
With oil prices having been at a sustained low for this record period, it seems that positive short-term and long-term news is eclipsing the Canadian election from the currency market’s vision.
Secondly, it seems markets may be predicting a continuation of Government. Whilst the challenging Liberals are in the lead, there is no love lost between themselves and the NDP. As such, the Conservatives may walk into a power sharing position in a sustainable coalition. Markets always prefer a continuation of government as there is normally little change in financial policy. Which would go a long way towards explaining the current rates of exchange.
Lastly, after the debacle in polling figures for the British election, markets may be waiting for EXIT polls before gambling on where the CAD value will be going. Understandable seeing as many people lost on on the UK election when rates went down by 4.5% only to return up again hugely when the polls were proved horrifically incorrect.
In any case, it seems there is little to lose in waiting to see if CAD rates stretch that little bit higher on election day at the start of next week. I have seen that the other writers on this site have suggested, limit orders are the best and most commonly used tool to when markets are poised for either a massive gain or little movement at all. Currency is bought automatically for you at an exchange rate you desire, but this has to be reasonable to have a better chance of it being reached. Email me on [email protected] for more information and a free quote on your transfer.