The Canadian Dollar reached its strongest position for over a year with Sterling rising to 0.55. The Canadian Economy had a very slow start to year but has turned things around reporting better than expected quarter growth. Whilst the oil price and other commodities heavily effect the price, the recent jump for resources has certainly played its part, the economy is moving in the right direction.
Household spending is moderately increasing and jobs are being created in the non-resource sectors. However the energy sector is shrinking, with foreign investment being lower potentially down to the increased strength in the CAD.
Is the CAD likely to strengthen further?
I am of the opinion that because oil prices are only just on the rise and there is major efforts to control the production of oil there is probably more room for growth. There is certainly a real opportunity against Sterling due to the Brexit vote to see further gains and I would not be surprised to see the CAD/GBP move to 0.58 in the coming weeks.
The Bank of Canada has chosen to hold the 0.5% interest rate and its raising its outlook for the domestic economy. The current economic fiscal stimulus in Canada is looking to be working with the predicted budget from the newly elected Liberal Party being accurate, the likelihood of the CAD not strengthening seems slim.
If you would like to discuss the CAD further, please feel free to get in contact with at [email protected]