Canadian Dollar (CAD) Exchange Rate: ‘Loonie’ Fairly Static before GDP Report
Over the past four days the Canadian Dollar has been trading in a pretty narrow range against the majority of its most traded currency counterparts.
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Limited economic data for Canada has restrained the currency’s movement, although falling commodity prices, Ukraine-inspired risk aversion and claims that the ‘Loonie’ is 10 per cent over valued have all taken their toll on the currency.
The Canadian Dollar was slightly stronger against the Pound on Thursday as the British currency declined in response to comments issued by Bank of England officials regarding interest rate increases and a drop in the UK Lloyds business barometer.
Later today modest ‘Loonie’ movement could occur following the release of Canadian current account figures, although developments in the US can be expected to have a greater impact.
If US durable goods orders data for January show another decline the CAD/USD pairing may enjoy short lived gains before Federal Reserve Chairman Janet Yellen addresses the Senate.
Yellen’s testimony concerns US fiscal policy and could trigger extensive market movement if she alludes to the timeline for tapering stimulus being adjusted in the wake of disappointing US data.
Tomorrow CAD volatility will follow the release of Canadian growth data for the fourth quarter.
Economists have forecast that Canada’s economy contracted by 0.3 per cent in December, month-on-month, following growth of 0.2 per cent in November.
The nation’s economy is believed to have expanded by 2.6 per cent in the fourth quarter on an annualised basis.
Given the patchy nature of recent economic reports for Canada, the data could well deliver a surprise result.
If that is the case, the ‘Loonie’ may break free from recent trading ranges.
Tomorrow’s UK consumer confidence survey could also impact CAD/GBP trading.
China’s manufacturing PMI (due out on Saturday) may have a notable impact on commodity driven currencies. Economists expect the measure to come in just above the 50 mark separating growth from contraction.