As the US government shuts down a major proportion of its operations in response to lawmaker’s failure to reach an agreement regarding the nation’s budget, global growth fears and the negative impact the action will have on Canada’s trade outlook caused the ‘Loonie’ to broadly soften.
The Canadian Dollar Exchange Rate was in the region of 0.5974 against the British Pound as of 14:40 GMT
With the US government having just three weeks to raise the debt ceiling, and the federal shutdown costing roughly 300 million Dollars a day in economic output, the commodity-driven Canadian Dollar declined against the Pound and Euro, as well as posting a notable drop against its Australian counterpart.
According to economist David Watt; ‘We’ve got uncertainty whether or not Canadian exports to the US are going to rebound sharply over the next several months with this uncertainty over the government shutdown and the US economic outlook. It makes sense the Canadian Dollar would lag its commodity peers during an episode such as this. It will behave more like the US Dollar because of the close ties.’
The CAD/GBP exchange rate hit a low of 0.5955
The CAD/GBP pairing had softened earlier in the European session as UK manufacturing PMI expanded for a sixth month in September, albeit by slightly less than forecast.
Although investors turned from higher-risk assets in the wake of this potentially damaging development, the US Dollar broadly dipped as the likelihood of the Federal Reserve tapering quantitative easing before the close of the year significantly decreased.
The ‘Loonie’ was also able to rally against its US rival after US Market PMI showed expansion that was smaller than initially forecast.
PMI came in at a three-month low for the world’s largest economy, prompting this response from economist Chris Williamson; ‘the US manufacturing sector is barely growing. Although output growth picked up in September, a weakening in growth of new orders suggests that the upturn could prove temporary and that growth could slow again in the fourth quarter. Of particular concern is a renewed decline in new export orders, which highlights how global demand remains frustratingly subdued.’
While data published yesterday showed that Canada’s economy expanded by more than forecast in July, this setback in the US could undo that progress in the months ahead.
Current Canadian Dollar (CAD) Exchange Rates:
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The Canadian Dollar/US Dollar Exchange Rate is currently in the region of: 0.9698 <
The Canadian Dollar /Euro Exchange Rate is currently in the region of: 0.7157 <
The Canadian Dollar/Pound Sterling Exchange Rate is currently in the region of: 0.5974 <
The Canadian Dollar/Australian Dollar Exchange Rate is currently in the region of: 1.0325 <
The Canadian Dollar /New Zealand Dollar Exchange Rate is currently in the region of: 1.1679 <
The Pound Sterling/Canadian Dollar Exchange Rate is currently in the region of: 1.6738 >
The US Dollar/ Canadian Dollar Exchange Rate is currently in the region of: 1.0299 <
The Euro/Canadian Dollar Exchange Rate is currently in the region of: 1.3966 >
The New Zealand Dollar/Canadian Dollar Exchange Rate is currently in the region of: 0.8559 >
The Australian Dollar/Canadian Dollar Exchange Rate is currently in the region of: 0.9682 >
(Correct as of 14:40 GMT)
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