The Canadian dollar continues to make gains across most of the major currencies including the pound as the price of oil climbs higher. The price of oil has been climbing higher after tensions escalated in the Middle East following the decision from US President Donald Trump to pull out of the Iran nuclear deal. This geopolitical uncertainty is pushing the price of oil higher and this is so far proving beneficial for the Canadian dollar due to the fact that Canada is a net exporter of oil.
The Canadian dollar is also seeing some support after the US Treasury Secretary Steven Mnuchin stated that the US – China trade was is being put on hold. A breakthrough in these relations was looking unlikely only last week and the positive developments could signal more optimism for the global economy.
This could be seen as positive for the Canadian dollar as any progress on trade for the NAFTA agreement which is still being renegotiated should help the Canadian economy. However this battle could take much more time to hammer out a deal between the US, Mexico and Canada considering the parties haven’t yet reached an agreement in principle. With Mexican elections around the corner it could mean that the earliest any deal can be hammered out is in 2019.
At least Canada has benefited from another 30 day exemption on steel and aluminium tariffs whilst negotiations continue although that exemption only lives until 1st June. There is the prospect of further extensions from the US which could help support the Canadian dollar in what has been an uncertain period. It appears the US is using its leverage and Steven Mnuchin has stated that both sides remain far apart on a deal which could mean more trouble for the loonie.
Rates for GBP CAD have moved much lower to 1.7150 creating an excellent time for selling Canadian dollars for pounds.
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