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Canadian Dollar (CAD) Recovers from Worst Levels

Last week’s high: C$1.7329

Last week’s low: C$1.7077

Canadian Dollar Bearishness Fades despite NAFTA Fears

After plummeting in the middle of last week as the Bank of Canada (BOC) adopted a dovish tone in its first interest rate announcement of 2018, Canadian Dollar (CAD) exchange rates were able to stabilise before the weekend.

On Wednesday, the Bank of Canada became the first major central bank to hike interest rates this year, raising borrowing costs to 1.25%. However, the bank warned that some stimulus would need to remain in place and also expressed concerns about the future of the North American Free Trade Agreement (NAFTA).

The possibility that US President Trump could pull the US out of the trade deal has weighed on the Canadian Dollar in recent weeks, but some analysts have stated that NAFTA concerns are overblown.

Friday’s Canadian manufacturing sales report also impressed investors, while the Pound stumbled in reaction to a disappointing UK retail sales report, which showed consumer activity fell sharply in December.

CAD Outlook: Key Canadian Inflation Data Due Next Week

The Canadian Dollar could firm this week if NAFTA concerns take a backseat and Canadian ecostats impress.

Canada’s November retail sales results will be published on Thursday, followed by the key December Consumer Price Index (CPI) report on Friday.

As the Bank of Canada (BOC) has already delivered its first 2018 interest rate hike, analysts will be looking to upcoming inflation data to help predict when the next rate hike could be. If Canadian inflation is stronger than expected it could boost BOC interest rate hike bets and leave the Canadian Dollar more appealing.

GBP/CAD could also be influenced by notable British data, including Wednesday’s UK job market report.

Key Events

22nd January

13:30 Canadian Wholesale Sales

23rd January

09:30 UK Public Sector Net Borrowing

24th January

09:30 UK Job Market Report

09:30 UK Jobless Claims

25th January

13:30 Canadian Retail Sales

26th January

09:30 UK Growth Rate

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.

Alastair Archbold

Currency Dealer

01442 892 066

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