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CAD gives up gains ahead of employment data

The GBP/CAD rate fell for the whole of September but we have seen a small-scale recovery in October. That is partly due to a general recovery of the pound and partly due to general concerns over the Canadian economy and the plans of the Bank of Canada over their monetary policy. On the 30th of August, the GBP/CAD rate was above CAD 1.72, it tumbled to CAD 1.6370 at the end of September but is back up to CAD 1.6690 this morning. Thursday brings a UK construction sector purchasing managers index and Canada’s Ivey PMI. Both are expected to be rather negative and both are likely to be influential. We will also see Canada’s trade balance, which is also expected to be negative. The markets are forecasting a deficit of circa 1.5 billion Canadian dollars in August, 50% larger than the previous month. If the forecasters have done their sums correctly, we are likely to see a further rise in the GBPCAD rate.

Aussie trade surplus improves

The Australian dollar gained a cent against the pound in the early hours after a healthy bounce in Australia’s trade balance, delivering a surplus of 9.64 billion Aussie dollars. The fact that Australia improved its exports without a corresponding rise in imports is clearly good news for the Australian economy. The GBP/AUD rate bottomed out at AUD 1.9075 before recovering a little. This pair is currently sitting at AUD 1.9120. That was partly influenced by a 20% rise in new car registrations in the UK. The day ahead will bring, what is expected to be a rather negative UK construction sector purchasing managers index and a speech from Bank of England Monetary Policy Committee member, Dr Ben Broadbent. In the wake of the UK prime minister’s conference speech, it will be interesting to see if that has impacted the thoughts of Dr Broadbent. As far as Australian data goes, tomorrow morning we’ll see the release of Australian retail sales and the Reserve Bank of Australia’s financial stability review. I think it is safe to say we will see some volatility overnight in this pair.