The Canadian Dollar (CAD) advanced against the Pound (GBP) and US Dollar (USD) on Friday after global market sentiment improved, and oil prices managed to rally back above the psychologically key level of $80 per barrel.
Sterling came under pressure after the Bank of England’s chief economist said that interest rates should remain low in order to avoid a long-term economic stagnation-taking root in the UK economy. Low inflation and a general slowdown in economic activity in the Eurozone and elsewhere are threatening to slow the UK’s economic expansion.
‘Put in plainer English, I am gloomier. This implies interest rates could remain lower for longer, certainly than I had expected three months ago. If there is genuine uncertainty about the path of the economy, the optimal policy response may be to avoid the worst outcomes,’ said Mr Haldane.
With a lack of domestic market moving data out of the UK, the Pound was offered little opportunity to regain lost ground because of the comments.
Bolstering the Canadian Dollar, the nation’s most traded export rebounded from a 27-month low to push back above the $80 per barrel level. Any improvement in the value of the commodity is seen as a positive for the ‘Loonie’ and wider Canadian economy.
Data released in the afternoons session showed that Canada’s inflation rate came in at 2% in September, a slight drop the preceding months figure of 2.1%. The drop was in line with economist expectations.
The report means that inflation has slowed for a second time in three months. The drop was seen as a positive as it brought the nations inflation rate down back down to the 2% target set out by the Bank of Canada.
‘In Canada like everywhere else we have a very contained inflation outlook. Today’s release would suggest that as well. The recent decline in global oil prices and slack in the economy suggest a little pressure to raise interest rates soon,’ said Camilla Sutton, chief currency strategist at Toronto based Bank of Nova Scotia.
The core inflation rate — which strips out volatile items like food and energy prices and the one the Bank of Canada pays more attention to in setting interest rates — came in at 2.1 per cent on an annualized basis, the same as the previous month’s level.
Canadian Dollar (CAD) Exchange Rates
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
Canadian Dollar,
,Pound Sterling,0.5530 ,
Canadian Dollar,,US Dollar,0.8897 ,
Canadian Dollar,,Euro,0.6955 ,
Canadian Dollar,,Australian Dollar,1.0145,
Canadian Dollar,,New Zealand Dollar,1.1146 ,
US Dollar,,Canadian Dollar,1.1240 ,
Pound Sterling,,Canadian Dollar,1.8075 ,
Euro,,Canadian Dollar,1.4373 ,
Australian Dollar,,Canadian Dollar,0.9855 ,
New Zealand Dollar,,Canadian Dollar,0.8911 ,
[/table]
