Canadian Dollar Dips to 10-Day Low as Canada Prepares for BoC Speech Whilst GBP Also Drops After Dovish BoE Remarks

Resilient Canadian Dollar Faces Week of Influential Data and Bank of Canada Policy Decision

The Canadian dollar hit a 10-day low yesterday as the country awaited the remarks from the Bank of Canada’s Governor Stephen Poloz. This low came as oil prices fell and domestic data revealed a shock decline in housing starts. Meanwhile, the GBP dropped after comments made by the Bank of England were received on the dovish end of the scale. Governors of the Bank of England warned that quantitative easing may still be on the cards for the UK, even with a cash rate of just 0.75%.

Poor Housing Data and a Drop in Oil Prices Causes the Canadian Dollar Fall

Yesterday, the CAD was trading at 0.2% lower at 1.3067 to the USD, this is the lowest intraday level since December 30th (at 1.3073). This gave an insight into how the Canadian Dollar was trading throughout the rest of the trading world. As oil prices dropped, the CAD lost support. This was coupled with the swelling of US crude stocks and easing fears of imminent escalation of conflict between the United States and Iran after the recent events which involved air-strikes on Iran.

Canada also saw poor housing data which did little to aide the CAD. The seasonally adjusted annualised rate of Canadian housing starts dropped 3% to 197,329 units for the month of December from a revised 204,320 units in November, data from the Canadian Mortgage and Housing Corporation (CMHC) suggested. Added to this, Statistics Canada, reported that the value of Canadian building permits fell by 2.4% in November from the previous month.

GBP Declines After Worries Creep in for Brexit, Cash Rates and the UK Growth Outlook

Despite UK PM Boris Johnson entering talks with the EU on Wednesday, the GBP has seen a decline at the hands of more uncertainty woes. The Bank of England’s (BoE) governor Mark Carney told members of a London conference that interest rate cuts may still be an option for the UK going forward. The dovish comments were acknowledged by the market and the GBP took a dip. Added to this, concerns over Brexit have taken over once more as investors worry that there may not be enough time to negotiate a full trade deal, instead both parties may have to only put forward their priorities regarding the deal. Concerns for the UK’s economic growth also sprouted. This came as a shock to the GBP as investors expected reduced downside risks and were hoping for an economic boost following the December election result. Investors in the GBP will be hoping for more positive news in the Brexit talks to arise which may give the GBP more support in the coming week.

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