The Canadian Dollar to Pound Sterling (CAD/GBP), Canadian Dollar to US Dollar (CAD/USD) and Canadian Dollar to Euro (CAD/EUR) exchange rates were all trending higher in the first half of Friday’s European session ahead of Canadian Inflation figures.
Earlier… The Canadian Dollar to Pound Sterling (CAD/GBP) and Canadian Dollar to US Dollar (CAD/USD) exchange rates tanked in Thursday’s European trading after oil prices tumbled to six-year lows, while the Canadian Dollar to Euro (CAD/EUR) exchange rate was trending higher.
The Canadian Dollar has been softer against a host of other majors as Canada’s largest export, crude oil, dipped to six-year lows of $42 per barrel. The ‘Loonie’ tracked crude prices as a global glut of oil continues to pressure the commodity lower.
However, the US Federal Reserve statement on Wednesday offered both the Canadian Dollar exchange rate and oil the opportunity to recover slightly. This week, the Federal Open Market Committee’s (FOMC) interest rate announcement was the major event for market movement as investors look toward the possibility of a US interest rate hike.
The FOMC was more cautious than economists had forecast and therefore investor sentiment in riskier currencies such as the Canadian Dollar shot up. Before the announcement the Canadian Dollar to US Dollar (CAD/USD) exchange rate resided at a six-year low, falling to depths of $1.2835. However, after the statement, the CAD/USD currency pair recorded its biggest daily jump in the latter six years, surging 2.6% to trend in the region of $1.2450 Canadian Dollars per US Dollar.
The Bank of Canada (BOC) recently made a 0.25% adjustment to its interest rate, while the Fed looks to be hiking rates in the near future—a factor that’s constantly weighing on the ‘Loonie’.
Foreign exchange market strategist Bipan Rai commented: ‘It’s been a while since we’ve had a gain this big. The divergence of the two central banks probably won’t be as wide in 2015, which should stabilise some of the downside pressures on the Canadian Dollar going forward.’
WTI Crude oil has since fallen by -1.65% in Thursday’s European session to $43.01.
Meanwhile, the Euro is trading tentatively amid negotiations between Greece and its creditors. In addition, the European Central Bank’s (ECB) Targeted Long-Term Refinancing Operation (TLTRO) had a better take-up in its most recent report with European banks borrowing a total of €97.8billion in cheap loans.
Credit Agricole representative Frederik Ducrozet commented: ‘The take-up at today’s TLRTO exceeded expectations, with 143 banks borrowing an extra €97.8bn from the ECB.’
‘TLTRO will help expand the ECB’s balance sheet at the margin but, more importantly, they will contribute towards improving monetary policy transmission and to lower borrowing costs even further.’
Meanwhile, the Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate climbed on Thursday after the British currency softened in response to political pressures. The UK general election in May is expected to cause major Pound Sterling damage as the prospect of a political shakeup looms.
Friday will see the release of UK Public Finances and Public Sector Net Borrowing stats which could impact the Pound. However, investors will soon be looking toward Tuesday’s UK Consumer Price Index (CPI) figures for an indication of how inflation is faring with the tumbling price of oil. Any negative ecostats could influence the Pound Sterling exchange rate lower.
USD/EUR, USD/CAD, USD/EUR Exchange Rates Advance after FOMC Announcement
The US Dollar to British Pound (USD/GBP), US Dollar to Euro (USD/EUR) and US Dollar to Canadian (USD/CAD) exchange rates jumped after the Federal Open Market Committee (FOMC) removed the word ‘patient’ from its vocabulary on the topic of interest rate hikes.
The move spurred investor sentiment in the ‘Buck’ as investors priced in the possibility of a rate hike in June.
The Federal Reserve is expected to be the first of the Group of Seven (G7) developed nations to hike interest rates since the onset of the global financial crisis.
Canadian Dollar (CAD) Exchange Rate Forecast: CAD/GBP, CAD/EUR, CAD/USD
The Canadian Dollar exchange rate is forecast to fluctuate as the price of oil continues to shift. However, Friday will be a major day when it comes to Canadian Dollar movement with Bank of Canada Consumer Price Index (CPI) figures released.
The state of inflation in the Canadian economy is likely to cause ripples in the market which could alter the CAD/GBP, CAD/EUR and CAD/USD exchange rates.
The Canadian Dollar to Euro (CAD/EUR) exchange rate is residing at 0.7370. The Canadian Dollar to US Dollar (CAD/USD) exchange rate is trending in the region of 0.7855. The Canadian Dollar to Pound Sterling (CAD/GBP) exchange rate is trading at 0.5320.