The Canadian dollar was little changed against its US counterpart yesterday; its strength is still holding close to the earlier one-month low. The Bank of Canada Governor is set to give a speech which is nearing closer, whilst investors begin to fidget over the potential global economic slowdown.
Global Economy Looks to Slow as Underperformance is a Common Theme Worldwide
Recent figures from around the world have been pulling down the global economy of late. The ongoing US-China trade war has not helped many as both countries appear to be unable to come to similar terms on the deal. This has caused worry and concern that a ‘Phase One’ deal will not go through. The potential global growth fallout effects of this are being noted by many around the world.
Further to this, recent figures from China surfaced yesterday which displayed the Chinese economy experiencing a decline in October. Germany was also added into the mix by only narrowly escaping a recession in the third quarter. The current global economy appears unstable at best and current events around the world do not appear to be helping with optimism.
Pressure Weighs on the Canadian Dollar
The pressure which is currently above CAD is certainly being felt. Bipan Rai from CIBC Capital Markets explained that there seems to be a combination of macro risks and concerns which are weighing heavily on the Canadian dollar. He also noted that whilst this uncertainty exists about the global economy there will always be uncertainty placed upon CAD. The Bank of Canada (BoC) also appeared concerned about the global economy and its effect on CAD as it cut its growth forecasts last month and left its benchmark interest rate on pause at 1.75%.
GBP/CAD Rate Remains in Consolidation Mode
These are the words from Juan Manuel Herrera of Scotiabank this week; he stated that the market is pointing towards GBP in a bullish pattern throughout the consolidation phase. The GBP/CAD interbank exchange rate is currently being pulled around in a three-pronged attack with the US-China trade talks, Brexit and Canada’s economy holding the outlook of the GBP/CAD rate in their hands. The trends observed in the market suggest that the pound is favoured to prevail and gain against the Canadian dollar. GBP appears set on reaching the highs experienced in March 2019.
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