As last week drew to a close the Canadian Dollar rallied against several of its most traded currency counterparts thanks to stronger-than-forecast Canadian growth data.
The ‘Loonie’ advance on the Pound and US Dollar, largely holding gains into the weekend.
On Monday higher-risk assets broadly declined as concerns mounted regarding the situation in the Ukraine and investors turned to safe-haven currencies like the Yen, Swiss Franc and ‘Greenback’.
However, the Canadian Dollar received some support as the price of commodities rose to almost six-month high, with Brent crude oil surging by 2.8 per cent.
While Canada is a commodity-driven nation, in this instance the higher commodity prices are indicative of geopolitical fears. In the opinion of analyst Edward Meir; ‘If the situation is not defused, it has the potential to spark wider economic turmoil through higher oil and gas prices, trade sanctions and a general ratcheting up of global tensions that could endanger the fragile global economic recovery.’
The Canadian Dollar lost ground against Sterling during the European session as the Pound was boosted by better-than-forecast UK manufacturing PMI.
During North American trading a report showed that Canada’s industrial product price index advanced by 1.4 per cent in January, largely as a result of the softer Canadian Dollar.
In a statement Statistics Canada observed; ‘Without the measurable effect of the exchange rate, the index would have risen 0.7 per cent instead of 1.4 per cent.’
Economists had been expecting the industrial product price measure to climb by 0.5 per cent in January, month-on-month, following a negatively revised gain of 0.6 per cent in December.
Canada’s raw materials price index rallied by 2.6 per cent in January month-on-month, almost double the 1.5 per cent gain forecast and up from 1.8 per cent in December.
The reports had little impact on the Canadian Dollar’s exchange rate.
As the week progresses UK construction and services reports could have an impact on the GBP/CAD exchange rate, but investors will mainly be focusing on developments in the Ukraine and the central bank rate decisions, taking place on Thursday.
On Thursday the Bank of Canada, Bank of England and European Central Bank will all be delivering their policy decisions for the month.
Other Canadian data to be aware of includes Thursday’s Canada Ivey PMI and Friday’s Canadian employment figures.
Economists are betting that the Canadian economy added 16,800 positions in February and that the unemployment rate held at 6.6 per cent.
Of course the US non-farm payrolls report will also be of considerable interest.
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,0.5394,
Canadian Dollar,,US Dollar,0.9024,
Canadian Dollar,,Euro,0.6554,
Canadian Dollar,,Australian Dollar,1.0113,
Canadian Dollar,,New Zealand Dollar,1.0722 ,
US Dollar,,Canadian Dollar ,1.1082,
Pound Sterling,,Canadian Dollar,1.8522,
Euro,,Canadian Dollar,1.5259,
Australian Dollar,,Canadian Dollar,0.9888,
New Zealand Dollar,,Canadian Dollar,0.9287,
[/table]
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