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Canadian Dollar Tumbles on Weak Canadian Data and Trade War Jitters

Last week’s high: C$1.7497

Last week’s low: C$1.7316

Trade Jitters make it Easier for Pound to Canadian Dollar Exchange Rate to Rally

A combination of domestic and global factors made the Canadian Dollar look unappealing to investors last week, making it easier for even a weakened Pound to sustain notable gains against the ‘Loonie’.

While Britain’s latest wage and inflation stats were disappointing, the latest retail sales results beat forecasts.

In comparison, all of this week’s notable Canadian data disappointed investors. New housing prices slowed in April, remaining stagnant month-on-month, while manufacturing sales unexpectedly contracted at -1.3%.

On top of disappointing Canadian data, worsening concerns about US protectionism left the Canadian Dollar even less appealing. NAFTA renegotiations remained tense, and on Friday the US announced new trade tariffs against China, worsening tensions between the two trading nations.

As a result, the Pound to Canadian Dollar exchange rate ended the week trending closer to its best levels in over a month.

CAD Outlook: Central Bank Bets in Focus Next Week

While the Federal Reserve was in focus for global markets last week, the coming week is likely to see other Central Bank news and speculation driving the Pound to Canadian Dollar exchange rate.

Most of the week will be relatively quiet, leaving the Canadian Dollar to be driven by potential developments regarding NAFTA or US-China trade tensions. However, on Thursday the Bank of England (BoE) will hold its June policy decision meeting.

The bank is not expected to make any changes to monetary policy, but investors will be more focused on the tone the bank takes regarding recent UK data.

For example, if the Bank of England expresses concern about weakening UK price pressures despite rising retail sales stats, the Pound could lose some of its recent gains. On the other hand, an optimistic BoE would help GBP/CAD to rally further.

Bank of Canada (BoC) interest rates are likely to be influenced by next Friday’s anticipated Canadian inflation and retail sales results. This could give the Canadian Dollar some stronger domestic support if it impresses.

Key Events

20th June

11:00 UK CBI Industrial Trends Orders

21st June

09:30 UK Public Sector Net Borrowing

12:00 Bank of England (BoE) Policy Decision

13:30 Canadian ADP Employment Change

13:30 Canadian Wholesale Sales

21:15 BoE Governor Carney Speech

22nd June

12:00 BoE Quarterly Bulletin

13:30 Canadian Inflation Rate

13:30 Canadian Retail Sales

 

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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

aja@fcgworld.co.uk

 

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