Last week’s high: C$1.6662
Last week’s low: C$1.6391
Canadian Dollar Rally Persists on Bank of Canada Expectations
Last week was another bullish one for the Canadian Dollar, which has seen weeks of consecutive gains versus a broadly weak Pound and has remained one of the most appealing major currencies.
Various factors are keeping the Canadian Dollar buoyant, including hopes that global trade relations will improve and robust domestic data.
Following the stronger than expected Canadian growth report at the end of June, last week saw stronger than expected Canadian manufacturing data and a trade balance that unexpectedly climbed into surplus.
This made it much easier for the Canadian Dollar to sustain solid gains against a broadly weak Pound. Investors sold the Pound on persistent no-deal Brexit fears, as well as concerning UK PMI and labour productivity data.
These factors have also been causing Bank of England (BoE) interest rate cut bets to rise. With the Bank of Canada (BoC) still predicted to keep hiking rates, this is only making CAD even more appealing.
CAD Outlook: Bank of Canada (BoC) Policy Decision to Take Focus
The Canadian Dollar has been one of the most appealing major currencies in recent weeks, but this has been largely due to bets that the Bank of Canada (BoC) will continue to take a more hawkish stance on its monetary policy outlook compared to other major central banks.
However, this all depends on the tone the Bank of Canada takes in its July policy decision on Wednesday.
If the Bank of Canada is more dovish than expected the Canadian Dollar could slump back from its recent highs. This would be the best chance GBP/CAD has of rising over the next week.
UK data due on Wednesday could influence the Pound slightly if it surprises investors, but political developments and Canadian Dollar strength are more likely to drive the Pound to Canadian Dollar exchange rate.
13:15 Canadian Housing Starts
13:30 Canadian Building Permits
09:30 UK Trade Balance
09:30 UK Growth Rate
09:30 UK Manufacturing and Industrial Production
09:30 UK Construction Output
15:00 Bank of Canada Policy Decision
16:00 Bank of Canada Press Conference
13:30 Canadian New Housing Price Index
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