Now that the Reserve Bank of Canada have increased interest rates, it’s difficult to judge where the rate may move head next. If the Bank of Canada is to follow any of the other central banks then one interest rate hike will resolve in more. Whilst it may not be imminent that we see further hikes in Canada the proposal of a plan to keep changing rates will have an effect. The rate moved to a 4-month low after the attest decision and in my opinion, talk of future rate hikes could see the level back to 1.60.
Potential Canadian Dollar Risks
One of the main influencers on the Canadian Dollar is the cost of a barrel of oil, mainly because it’s Canada’s largest export. Currently the price of oil has been dwindling a little and last year the major price collapse was one of the main reasons for the CAD’s demise. There is still time before a total meltdown takes place, however the OPEC nations in some cases are having trouble in limiting supply to the market. If there was to be an oil price cash, the Canadian Dollar would start to lose most of its gains.
Sterling Interest Rate Hike
Over the last 2 months any major boost for Sterling has been caused by optimism of a interest rate hike from a Member of the Bank of England. Mark Carney suggested that inflation keeps rising then there would have to be changes to stimulus. Two weeks ago, members of the committee suggested there wouldn’t be a hike and Sterling lost over 1% against major currencies. If there was at any point a hint of a UK interest rate hike, Sterling would jump and GBP/CAD would be back to the 1.70 level.
If you do have any questions with regards to my forecast please send me an email to firstname.lastname@example.org. I will get back to you within a few hours and may be able to help you put together a strategy that will best sit your needs. When exchanging funds the difference a small movement in the rate can have a major effect, I will be able to assist to make sure you trade at the right time.