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Can Canadian Dollar Hold its Ground on Strengthening Oil Prices?

Yesterday’s high: C$1.6550

Yesterday’s low: C$1.6486

Canadian Dollar Supported by Oil Forecasts

The Pound to Canadian Dollar exchange rate has trended within a narrow range for most of the week. Sterling lacks the drive to march higher due to mixed UK data, while the Canadian Dollar has been held back by low demand for risk-correlated currencies.

Prices of oil, Canada’s most lucrative commodity, increased on Thursday as OPEC raised its forecasts for 2018 crude oil demand. The group suggested that its moves to curb the oil supply glut were having an effect.

However, the ‘Loonie’ failed to capitalise on oil news due to low demand for risky currencies. The past week’s geopolitical tensions between the US and North Korea have left investors more interested in ‘safe haven’ assets instead.

CAD Outlook: July Inflation Results Due Next Week

The Pound to Canadian Dollar exchange rate is likely to continue trending narrowly until geopolitical jitters cool slightly – or until the Pound strengthens.

If next week’s UK inflation or wage growth reports beat expectations, speculation that the Bank of England (BoE) could become more hawkish will flare up again and GBP/CAD will rise.

However, if the ‘safe haven’ rally fades and oil prices remain strong, the Canadian Dollar could hold its ground. Next week’s most notable Canadian data will be July’s inflation report, which comes in next Friday.

Key Events

15th August

09:30 UK Inflation Rate

16th August

09:30 UK Job Market Report

18th August

13:30 Canadian Inflation Rate

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To keep up to date with the Canadian Dollar, visit the CAD blog in our Currency News section.

Richard Beaumont

Currency Broker
T: +44(0)1442 892 060

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