The Canadian dollar is strengthening at present after a recent wave of Canadian economic data has impressed the markets. The Canadian economy appears to be performing very well and there is a strong chance that there may be an interest rate increase at the next meeting. The markets are beginning to price in the prospect that there could be a rate hike later this week.
CAD USD has now hit its highest level for two years and the combination of a heathy Canadian economy and concerns over the US economy are seeing this pair move further apart. The US nonfarm payrolls from Friday which arrived weaker than expected is causing the US dollar to come under some pressure creating a spike for CAD USD.
The performing Canadian economy is resulting in investors moving from other currencies into Canadian dollars as the yield is likely to be higher going forward. Canada has followed in the US’s footsteps by raising interest rates. Although the pace in the US has come under question the opposite is true in Canada with interest rate expected to increase rates by about 1% in gthe next twelve months.
Meanwhile for GBP CAD, the ongoing Brexit conversation ended badly last week with no real further progress in the negotiations between Britain and the EU. Brexit secretary David Davis and his counterpart Michel Barnier are no closer to discussing a future trade deal as the issue of the divorce settlement is still not clear. Any improvement in negotiations in a couple of weeks of time when the discussions recommence could see the pound rally quite quickly.
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