Yesterday the Canadian Dollar slumped against all of its major rivals and the GBP to CAD pairing strongly advanced following Bank of Canada Governor Stephen Poloz’s speech in Halifax.
Although upbeat Canadian manufacturing sales figures and easing risk aversion had earlier supported the asset, the ‘Loonie’ came under significant pressure as Poloz asserted that Canada may experience sub-par growth for the foreseeable future.
The commodity-driven currency then declined further as Canada’s Finance Minister Jim Flaherty announced his resignation, and the CAD/USD pairing continues to trade below 90 US cents.
Flaherty is Canada’s third longest serving Finance Minister having held the position for eight years. Throughout the global economic crisis Flaherty has played an instrumental role in safeguarding Canada’s economy, but it seems that divided opinions have pushed him into quitting the post.
Swiftly after the publication of a new fiscal plan which envisaged surpluses in the region of 45 billion Canadian Dollars, Flaherty argued against the Conservative pledge of utilising the funds for family-income splitting.
Shortly afterwards Canada’s Prime Minister Stephen Harper contradicted Flaherty’s assertion by deeming the move good policy.
In the eyes of many industry experts it was this event which led to Flaherty’s surprise resignation.
Flaherty also opposed US stimulus measures (unlike the rest of the Canadian government).
Former Bank of Canada Governor and current Bank of England Governor Mark Carney said this of the development; ‘Canada stood literally and figuratively at the top of the world given its economic and financial performance. Much of that was down to Jim Flaherty, my college and friend.’
The Canadian Dollar was putting in a poor performance against rivals like the Pound, Euro and US Dollar during North American trading and failed to benefit from a domestic report showing that Canadian wholesale sales increased by 0.8 per cent in January, month-on-month, as economists had expected.
December’s decline in wholesale sales was positively revised to -1.3 per cent.
In the hours ahead further ‘Loonie’ fluctuations could be triggered by the Federal Open Market Committee policy announcement.
Investors interested in the Pound to CAD exchange rate will also be looking ahead to Friday’s UK public sector net borrowing figures and Canada’s inflation report.
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,0.5461,
Canadian Dollar,,US Dollar,0.9050,
Canadian Dollar,,Euro,0.6516,
Canadian Dollar,,Australian Dollar,0.9915,
Canadian Dollar,,New Zealand Dollar,1.0534,
US Dollar,,Canadian Dollar ,1.1184,
Pound Sterling,,Canadian Dollar,1.8587,
Euro,,Canadian Dollar,1.5554,
Australian Dollar,,Canadian Dollar,1.0180,
New Zealand Dollar,,Canadian Dollar,0.9642,
[/table]
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