The Canadian dollar has started 2020 as one of the most appealing currencies in the major trading market. Despite a recent lack of economic data to stir up interest, the currency has held its own and remained in a resilient but strong position. This week will see the release of various economic figures from the Canadian economy and more importantly, the Bank of Canada’s policy decision. The resilience shown by the CAD is evident in its strong exchange rates versus the GBP and USD. With the pound unable to regain the upper hand against the CAD due to the Loonie’s lasting strength, the GBP/CAD rate was trending lower last week than its opening figure.
Canadian Dollar Looks to the BoC to Keep the Currency Desirable
The Canadian dollar has fared well thanks to the Bank of Canada’s stance on its Canadian interest rates over the past few years. The BoC is one of the few major banks which have avoided taking a dovish stance regarding their monetary policy and this has shone on the currency in 2020 as it keeps up strong rates with rivals like the GBP and USD. With both the Bank of England and the Federal Reserve both showing signs of rate cut speculation, the BoC still stands firm in signalling that no imminent rate cuts are on the horizon for Canada. The CAD’s resilience was also boosted last week following the release of Canada’s December job market results which came in above expectations. The currency was further boosted by strong oil prices and global trade hopes. The Canadian Dollar edged over the Pound as bets of a BoE interest rate cut increased after poor UK economic data releases.
Upcoming BoC Policy Decision to Set the Course for the Canadian Dollar as Key Canadian Data Is Released
This week will be a defining one for the Canadian Dollar. There will be a number of economic data releases which will help to formulate the central bank’s policy decision. The first will see Canada’s November manufacturing sales results on Tuesday, followed by Wednesday’s Canadian inflation results from December and wholesale sales from November. The inflation data will be one that investors will be most keen to observe as this data has the potential to swing the currency both ways. The most important news of all for Wednesday however will be the BoC’s policy decision. The BoC is not expected to make any changes to its monetary policy, but the statistics from the week’s economic data will likely play a part in the banks next moves. Investors will hope that the economic data will be positive, for negative data could invoke a dovish response from the BoC which would see the CAD lose much of its recent strength. After the decision on Wednesday, the Canadian retail sales results are expected on Friday, which could see some late-week movement for the CAD.
If you’re considering buying or selling Canadian dollars and would like to compare rates or know more about the factors that could impact your exchange rate, feel free to contact me directly, I look forward to hearing from you.