Following the news of the US air-strikes on Iran, the price of oil has spiked. Being one of the largest traders in oil in the world, Canada has benefitted from the surge in the commodity. This week saw the seventh straight week of gains for the CAD on the USD as the Canadian Dollar cashed in on a relatively weak US Dollar. Meanwhile, the GBP is still in amongst Brexit worries but positive UK services PMI data helped to fend off the negativity and lifted the currency a little to start the week.
Canadian Dollar Rises After Spike in Oil Prices
CAD continued to strengthen its gains on the USD for the seventh week in a row last week, this week looks to continue this run. The Canadian Dollar extended its gains by 0.1% which totalled gains of over 2%. The Canadian Dollar has got the better of a weaker USD in recent weeks and has edged up against it as investors weighed up weaker than forecast US ISM manufacturing data.
Canada will look to the Middle East for its next moves concerning the spike in oil prices. CAD advanced on all major rivals apart from the Japanese Yen last week, mainly due to the oil rise. The risk of a retaliation attack from Iran on the US is keeping oil trading with a risk premium for the time being which is keeping the commodity sensitive Canadian Dollar elevated. With no immediate data releases for the Canadian Dollar, attention will stay fixated on the US-Iran tensions and the price of oil.
GBP Softens Against Euro and US Dollar but Rallies on Positive Services PMIs
For the GBP, it has started the New Year on the softer side especially against the Euro and the USD. But positive news came from the UK services PMI data which saw the figure beat projections arriving at 50 opposed to the predicted 49.1. This was positive news and gave support to the GBP as it opened the door to a possibility of economic growth going forward for the UK. Analysts at Danske Bank mentioned that despite beating projections, the PMI data is still weak, but future business expectations have risen on the back of Boris Johnson’s election victory. Investors will be hoping that this business growth will continue through 2020 and help to drive the economy back to a performing level.
If you would like updates for GBP/CAD rates or have an upcoming currency transfer, please contact me directly using the form below.