We’ve written extensively about the relationship between oil and the Canadian Dollar on this blog before, and this month that relationship has really been a talking point as the price of oil dominates financial headlines and CAD has experienced a volatile month.
Crude oil prices have risen 15% in August, mostly off the back of speculation that OPEC members will reduce output but also a weakening US Dollar has boosted oil’s demand as the commodity is priced internationally in US Dollars.
The Canadian Dollar has spent most of the month gaining in value when compared with the British Pound, which is what you would expect as it’s in line with Canada’s biggest export gaining in value, but as oil has softened over the past week so has the value of the Loonie, and this is something Canadian Dollar sellers must pay close attention to.
I steep drop in oils price is likely to have a negative impact on CAD’s value, so Canadian Dollar sellers may wish to take advantage of the recent gains as oil could continue to soften after such a bullish run, particularly if the USD strengthens.
Those planning on converting GBP into CAD should bear in mind that although the Pound has dropped quite a lot recently, it is still far from the lows of 2011-2013 when the pair spent a lot of time below the 1.60 mark which is over 10 cents away from the current levels.
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