On Friday the GBP/CAD pairing fluctuated as a mixed bag of Canadian reports inspired volatility.
Yesterday the ‘Loonie’ spent the local session testing new lows against the US Dollar, pushing beyond 89 US cents as a hawkish Fed lifted the ‘Greenback’.
Furthermore, while upbeat US reports are supportive of Canada’s economy (as the US is Canada’s largest trading partner) the CAD/USD pairing extended declines following their publication.
Over the last few days the odds of the US increasing interest rates has risen considerably, and the stark contrast between the Federal Reserve’s policy approach and that adopted by the Bank of Canada has kept pressure on the Canadian Dollar.
The ‘Loonie’s bearish relationship with its rivals looked set to continue as the end of the week drew near.
While the Pound was floundering following the publication of data which showed that the UK recorded an unexpectedly large budget deficit in February, the Canadian Dollar put in a patchy performance as local retail sales increased by more than forecast.
Canadian retail sales surged by 1.3 per cent in January, month-on-month, following a decline of 1.9 per cent in December which was steeper than originally estimated.
The increase was the most rapid for eight months.
Economists had expected a sales gain of 0.7 per cent.
Sales less autos were up 1.0 per cent on the month.
However, Canadian Dollar gains were limited as investors digested the news that national inflation slowed to almost the bottom of the BOC’s target band as clothing prices fell and gasoline costs dropped.
From January the Canadian consumer price index climbed by 0.8 per cent, slightly more than the 0.6 per cent anticipated.
Prices were up 1.1 per cent on the year, slightly more than the annual gain of 1.0 per cent forecast but down from 1.5 per cent the previous month.
Bank of Canada Governor Stephen Poloz did warn earlier this week that inflation probably slowed from January, so ‘Loonie’ losses were largely priced in.
During his dovish statement Poloz stated; ‘Looking through the short-term volatility, inflation still seems to be running at around 1.2 per cent, give or take a tenth or two.’
Next week Canadian reports are few and far between, but the GBP/CAD pairing may well be driven by UK growth, inflation and retail sales data.
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,0.5393,
Canadian Dollar,,US Dollar,0.8892,
Canadian Dollar,,Euro,0.6451,
Canadian Dollar,,Australian Dollar,0.9798,
Canadian Dollar,,New Zealand Dollar,1.0420,
US Dollar,,Canadian Dollar ,1.1237,
Pound Sterling,,Canadian Dollar,1.8557,
Euro,,Canadian Dollar,1.5501,
Australian Dollar,,Canadian Dollar,1.0203,
New Zealand Dollar,,Canadian Dollar,0.9605,
[/table]
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