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2016

Canadian Dollar Research Report

Published: Monday 07 November 2016

  • Volatility for the Canadian Dollar thanks to the EU and US
  • Surprisingly positive Canadian employment data 
  • All eyes on the US Presidential Election
It’s been a volatile month for GBP-CAD, as the currency pairing started October 2016 at around 1.68; and as it stands, looks set to end the first week of November at a similar level, after reaching lows of 1.5930 only three weeks ago.

A key reason for the volatility of the Canadian Dollar has been over speculation surrounding the trade deal between Canada and the European Union (EU). The Comprehensive Economic and Trade Agreement (CETA) seemed to have fallen at the final hurdle at the end of October, following disagreements among regional Belgian authorities. With all other EU member states supporting the deal, Belgian Prime Minister, Charles Michel, was forced to announce that he could not approve the agreement, as his regional governments vetoed it. However, the Canadian Dollar received a minor boost after EU officials managed to secure the support of the dissenting Belgian authorities. The deal has since been confirmed at the start of November. The UK watched the negotiations and disagreements around CETA closely, as they, too, will be entering negotiations with many – if not all – EU countries once Brexit begins in earnest, with the aim to implement tariff free agreements that benefit both parties. The fact that a tariff free arrangement was secured will have boosted hopes for the UK; the fact that it took at least two and a half times longer than the timescale given for Brexit negotiations will not have gone down so well.

Canadian economic data has been positive overall, however, with employment figures better than expected at the start of the month. The net change in employment data was expected at -10k, however, it actually came in at 43.9k in the plus. Unemployment figures remained flat at 7%.

Despite reasonable data, the Canadian Dollar will have been dragged down by the uncertainly surrounding the US Presidential Election next week. If Trump was to win, we would expect to see the Canadian dollar take a bit of a tumble along with the USD.
 

Canadian Dollar buying and selling strategies in the current market


For those looking to transfer GBP-CAD in the short term, we would suggest waiting to see what happens with the US election next week. If Clinton wins, the Canadian Dollar will more than likely strengthen with the US Dollar, however, if Trump wins, we would expect to see a far bigger movement in the other direction.

For those still holding CAD, we would suggest putting a trade in early next week or at least placing a stop loss to protect against any major movements to a lower rate next week. 




Canadian Dollar Research Report compiled by Alastair Sweetman

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