In the initial aftermath of the Bank of England’s rate announcement the Pound consolidated its advance against the US Dollar and strengthened against some of its other major rivals.
However, in the hours which followed the Pound trimmed some of its gains and weakened against the Euro and Canadian Dollar.
While the Euro was rallying in the wake of the European Central Bank’s decision to refrain from introducing an additional rate cut, the Canadian Dollar was boosted by positive domestic developments.
Canadian building permits were shown to have surged by 8.5 per cent in January, month-on-month, following a revised decline of 4.8 per cent in December. Economists had expected a gain of 1.6 per cent.
The surge in permits was due to record levels of housing construction.
Meanwhile, Canada’s Ivey Purchasing Managers Index jumped to a four-month high in February.
The index rose from 56.8 to 57.2 last month, moving further away from the 50 mark separating growth from contraction.
Economists had expected the index to decline to 52.9.
The Canadian Dollar advanced modestly after the data was published, and in the opinion of some economists the ‘Loonie’ has bottomed out and (with the support of upbeat domestic data) is unlikely to drift any lower in the near term.
According to the Canadian Imperial Bank of Commerce; ‘Given diminished expectations of a cut in interest rates, the Loonie now looks cheap compared with its recent relationship with yield spreads. And with the US recovery likely to quicken again once the weather warms up, Canadian exports should benefit and shrink the trade deficit.’
The Canadian Dollar’s advance on its US counterpart was aided by a less-than-impressive US factory orders report and the expectation that tomorrow’s US non-farm payrolls report will disappoint expectations.
The Bank of England’s 12-month inflation expectation report and Canada’s employment figures are likely to cause additional GBP/CAD movement before the weekend.
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,0.5412,
Canadian Dollar,,US Dollar,0.9050,
Canadian Dollar,,Euro,0.6592,
Canadian Dollar,,Australian Dollar,1.0080,
Canadian Dollar,,New Zealand Dollar,1.0722,
US Dollar,,Canadian Dollar ,1.0957,
Pound Sterling,,Canadian Dollar,1.8344,
Euro,,Canadian Dollar,1.5166,
Australian Dollar,,Canadian Dollar,0.9949,
New Zealand Dollar,,Canadian Dollar,0.9294,
[/table]
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