Last week’s high: C$1.6928
Last week’s low: C$1.6681
Rising Canadian Inflation Boosts CAD
A stronger-than-expected uptick in May’s Canadian Consumer Price Index offered a boost to CAD exchange rates on Wednesday.
With the headline inflation rate comfortably exceeding the Bank of Canada’s (BoC) 2% target, clocking in at 2.4%, the chances of another imminent interest rate cut decreased.
The commodity-correlated Canadian Dollar also benefitted from a sharp surge in oil prices over the course of the week, driven by escalating tensions between the US and Iran.
As Brent crude rose to its highest level in three weeks this helped to lift CAD exchange rates heading into the weekend.
Demand for the Pound, meanwhile, eased thanks to jitters surrounding the Conservative leadership contest and the increasing risk of a no-deal Brexit.
A surprise downgrade to the Bank of England’s (BoE) second quarter growth forecast also dented the GBP/CAD exchange rate.
CAD Outlook: Higher Oil Prices to Sustain Canadian Dollar Demand
Elevated oil prices could keep the Canadian Dollar on a positive footing in the days ahead if tensions in the Middle East fail to ease.
Even so, if the risk of an armed conflict between the US and Iran appears to increase further this could drive CAD exchange rates down as market risk appetite fails.
Friday’s monthly Canadian gross domestic product reading could equally put pressure on the Canadian Dollar if growth momentum stalls as forecast.
Developments in the Conservative leadership race may continue to weigh on the GBP/CAD exchange rate in the near term.
Any negative revisions to the finalised first quarter UK gross domestic product figures could see the Pound fall further out of favour, meanwhile.
11:00 UK CBI Reported Sales
13:30 Canada Wholesale Trade Sales
00:01 UK GfK Consumer Confidence Index
09:30 UK Gross Domestic Product
13:30 Canada Gross Domestic Product
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Foreign Exchange Manager