Over the past month, the Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate was trending within the range of 1.8249 – 1.9175.
In general, the ‘Loonie’ (CAD) has been trending lower in recent weeks amid speculation that the Bank of Canada (BOC) will cut the benchmark interest rate for a second time later this year. The Canadian asset recovered a little after BOC Governor Stephen Poloz intimated that further intervention wasn’t required as traders underestimate the Canadian Dollar’s resilience to low commodity prices.
However, the fractional uptrend was short-lived after domestic data showed Canadian growth unexpectedly fell short. On the year, Gross Domestic Product increased by 1.5% in March, missing the median market forecast 2.1% growth. On the month, GDP declined by -0.2% in March. This caused the Annualised Quarterly GDP to dive by -0.6% in the first-quarter; failing to meet with the market consensus of a growth increase of 0.3%. The poor growth data results reignited speculation that the BOC will be forced to intervene in order to combat faltering ecostats. The ‘Loonie’ has also faced headwinds from low crude prices.
Canadian Dollar (CAD) Exchange Rate Forecast to Soften ahead of Manufacturing PMI
The Canadian Dollar is generally trending lower versus its major rivals on Monday as traders continue to speculate on the possibility of a lending rate revision. WTI crude oil prices remain below $60 a barrel, which has stymied demand for the Canadian asset. Additionally, market risk-appetite has dampened considerably amid geopolitical upheaval in Europe and a stronger US Dollar. The ‘Loonie’ is likely to continue trending in a weak position as traders await manufacturing data. The RBC Manufacturing PMI fell into contraction territory in April.
In addition to the Canadian Manufacturing PMI, due for publication later on Monday, there will be a few influential Canadian data publications to provoke volatility. With that being said, however, the Canadian economic docket is relatively sparse over the coming week so movement is likely to be dictated by market risk-appetite and commodity prices. The most influential Canadian data publications will be labour market figures, due for release on Friday June 5th. The Unemployment Rate is forecast to hold at 6.8% in May and Net Change in Employment is forecast to show 10,000 newly employed in May. In addition, Thursday’s Ivey Purchasing Managers Index will be of interest to those invested in the Canadian asset.
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