The Canadian dollar (CAD) exchange rate complex continues to strengthen, with 2016 set to see more of the same according to the latest forecasts. Fed interest rate freeze and falling GDP hindered US Dollar rates last week.
Tuesday's foreign exchange markets find the US Dollar to Canadian Dollar exchange rate bullish, converting 0.74 per cent higher compared to the day's open.
The CAD has lost out against most peers of late, owing to a shift in the global price of commodities. The price of oil and gold has finally fallen, after sustained periods of growth.
According to a new report by the European Central Bank (ECB), US data may be getting leaked to some areas of the markets before it is officially announced; news which has weakened the US Dollar exchange rates today.
The ECB study found that, on multiple occasions, markets moved significantly before high-impact data had been released, in a way that suggested some investors had known what the result would be - and therefore how the markets would be about to react.
The previous week’s US economic announcements did a fair amount of damage to the appeal of the US dollar to Canadian dollar exchange rate, owing to their unfortunate implications for the future of US economic growth.
While it had been largely expected, the Federal Open Market Committee (FOMC) decision to freeze the interest rate nonetheless sent the USD/CAD exchange rate diving, on account of the next decision period not occurring until June.
Elsewhere, Thursday saw the US currency take a second consecutive hit due to the Q1 GDP growth rate falling from a previous 1.4% to 0.5%.
Most analysts see the Canadian dollar fx uptrend to continue.
Tuesday's USD to CAD conversion continues to fall as US dollar strength fails to recover.
Other Foreign Exchange News
Latest US Dollar/Canadian Dollar Exchange Rates
On Saturday the US Dollar to British Pound exchange rate (USD/GBP) converts at 0.808
The pound conversion rate (against us dollar) is quoted at 1.237 USD/GBP.
The pound conversion rate (against euro) is quoted at 1.16 EUR/GBP.
The pound conversion rate (against pound) is quoted at 1 GBP/GBP.
NB: the forex rates mentioned above, revised as of 20th Apr 2024, are inter-bank prices that will require a margin from your bank. Foreign exchange brokers can save up to 5% on international payments in comparison to the banks.
US Dollar Exchange Rates Forecasted Volatility - US PMIs due This Week, along with Unemployment and Payrolls Stats
The coming week will feature a wide range of US economic announcements, many of which are expected to have a considerable amount of impact.
Highlights of the weekly offerings include Monday’s pessimistically predicted manufacturing PMIs and Wednesday’s ADP employment change and balance of trade outcome for April and March respectively.
Forecasts in these fields are for a reduction in the employment change and in the current trade balance deficit.
Additional events to watch out for include Wednesday afternoon’s non-manufacturing PMI for April, as well as Friday’s non-farm payrolls and unemployment rate outcomes for the same month.
Canadian Dollar (CAD) Exchange Rates Supported Previously by Rising Commodity Prices
Last week saw the Canadian dollar exchange rates suffer mixed fortunes, as while domestic data was fairly thin on the ground, commodity costs nonetheless boosted the CAD’s appeal considerably.
On the WTI index, crude oil per barrel rose from almost $42.50 to almost $46.50, while the price of gold per 100 ounces increased steadily from around $1240 to the region of $1277 by the end of the week.
Domestic events included a cautious speech from Bank of Canada Governor Stephen Poloz and monthly GDP for February, which fell from 0.6% to -0.1% on Friday.
GBP/CAD Outlook: Canadian Trade Balance and Employment Stats due This Week
The coming week is set to bring the announcement of a few high-impact Canadian ecostats, starting with tomorrow’s RBC manufacturing PMI for April; this is expected to dip slightly.
Other announcements of note include the March’s trade balance results on Wednesday (expected to show a deficit reduction) and Thursday’s monthly building permits result for the same month.
Friday will close off the first week of May with the announcement of the April unemployment rate; current estimates are for stagnation at 7.1%.
USD/CAD Forecast: US President Reflects on Economic Performance as Second Term Approaches Closure
With the upcoming US Presidential Election in November set to bring a close to Barack Obama’s Presidential career, the 44th President has been looking back on the historic legacy he is to leave.
Regarding the national growth and unemployment rates, Obama has said:
‘I can probably tick off three or four common-sense things we could have done where we’d be growing a percentage or two faster each year. We could have brought down the unemployment rate lower, faster. We could have been lifting wages even faster than we did. And those things keep me up at night sometimes’.
2016-2017 Exchange Rate Forecasts from Top Financial Institutions
Scotiabank suggest the latest CAD trend higher could continue in their short-term outlook:
"Oil prices, yield spreads, and sentiment are all supportive of further CAD strength as WTI tests $46.50/bbl and the 2Y yield spread consolidates at levels last seen in late October. Measures of implied CAD volatility continue to soften, pressuring the relative cost of protection against CAD weakness. We look to further CAD strength."
Citi Economics highlights this week's Canadian GDP as a driver for the USD/CAD near-term exchange rate movement:
"USDCAD appears on target to test 1.2500 with interim resistance seen at 1.2563 (Jun15 support) and potentially break below 1.2500 though Canadian GDP and the employment report next weeks should see any CAD gains fade fairly quickly."