The Bank of Canada interest rate decision this afternoon and their monetary policy statement was largely a non-event and was completely overshadowed by slashed oil prices, causing CAD to weaken on the markets.
Oil prices were slashed back to the lows of April as forecasted demand for oil over the next few months subsided. This was a combination of increased oil supply from Iran and an increase in US oil stocks by 8 million more barrels than previously estimated.
The more than 1% gain for CAD against its currency pairings such as the USD, Euro and Pound Sterling with the positive result of a majority government over an ineffectual minority on Tuesday were completely reversed.
The net loss for the Canadian Dollar since Monday is about -0.3% now, making a purchase on USD/CAD, EUR/CAD and GBP/CAD cheaper following a rollercoaster few days – aptly giving the ‘Loonie’ its name.
Oil prices have tested these lows before, and have since risen as drilling at these levels rapidly becomes uneconomical. Prices quickly rise again and the Canadian Dollar benefits as a result.
However, this slide on the CAD could continue in the short-term as markets digest the news. Furthermore, the monetary policy statement – though ignored, said the long-term forecasts for the economy were still on target, but may suffer in the very short-term from the halt in the oil price rally.
The oil market has proven itself to be very changeable. CAD gained by almost 2% against its currency pairings at the start of the month simply with the announcement that that corporate heads in various countries were coming together to tackle cheapness by collectively reducing supply. This made a $100,000 CAD purchase significantly more expensive. As an example on GBP/CAD it would have cost you £1004 more from a poorly times transfer on that day.
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As a specialist currency brokerage we exist because we can beat the rates offered by local banks, and regularly assist anyone looking to move funds into or out of Canada, regardless of their currency or country of origin. Personally, I have been assisting those looking to emigrate to Canada (and move the opposite direction), buy a second home, and the variety of other reasons for a currency transfer for more than 8 years. I am confident I can show you a significant saving and help you time your transfer.