Canadian Dollar Exchange Rate Forecast – Trends Lower Versus Euro (CAD/EUR) and Pound (CAD/GBP)
The Canadian Dollar has been trending lower versus the Pound (CAD/GBP) and the Euro (CAD/EUR) on Monday as a result of weakening oil prices. The CAD to EUR exchange rate is presently trending at 0.7035 and has reached session highs of 0.7086. Meanwhile, the Canadian Dollar to Pound currency pairing is trading in a narrow range between the regions of 0.5535 and 0.5567.
If you're looking to make an international money transfer, we recommend TorFX.
The Bank of Canada (BOC) latest monetary policy report (due out in a few weeks) is expected to detail the effect of the recent fall in oil prices. BOC Governor Stephen Poloz stated last week at the Washington International Monetary Fund (IMF) conferences that the effect of volatile oil prices on the economy were difficult to gauge.
Poloz stated: ‘There’s a question mark about whether it’s a permanent decline, or not. That requires judgement. It’s not an easy analysis, because there’s the consumers. Lower prices, perhaps. But that’s higher incomes. The models are intended to work all that out. But it’s very hard to do without a full general equilibrium assessment. So we’ll save that for a couple of weeks.’
However, whilst some resource-rich areas in Canada could struggle, other areas could actually see a benefit from the slump in commodity costs. Consumers will be able to enjoy lower fuel costs as an effect of lower oil prices which will help Canadian citizens’ pockets.
Poloz also commented that the central bank would need to consider oil prices when discussing any changes to the current bank rate. Although interest rates in Canada have remained low for a prolonged period of time, many economists had hoped that interest rates may see movement in the near future.
However, Poloz also asserted that he wouldn’t be laying out a specific time-frame for any rate hikes. Poloz stated: ‘The bottom line for me is that it’s better to leave some of that uncertainty on the market’s plate.’
Meanwhile, the Euro has been recouping some of last week’s losses over fears that the Eurozone may be close to entering recession. If the 18-nation Euro area does slip into a recessive period, UK economic growth is likely to suffer. The IMF conferences saw Chancellor George Osborne state that ‘serious clouds were gathering on the horizon’ for the state of the global economy.
The Pound has been softer on Monday ahead of Tuesday’s UK Consumer Price Index, which is expected to shrink from 1.5% to 1.4% in September on the year. If inflationary levels do slip, the Bank of England (BOE) will find support for its current stance of maintaining lower interest rates.
Canadian Dollar to Pound (CAD/GBP) and Euro (CAD/EUR) Exchange Rate Forecast
Canadian data is scarce throughout the week until Friday which will see the release of Consumer Price Indexes. At present the Bank of Canada’s Consumer Price Index is expected to remain at 2.1%; however, any movement in inflation could cause fluctuations for the ‘Loonie’.
The results of the latest ZEW German Economic Sentiment Survey are to be released on Tuesday, a report which could see the Euro soften further. However, in the unlikely event that German data surprises to the upside, the Euro could enjoy support. The CAD to GBP exchange rate could witness further losses if UK inflation figures prove favourable on Tuesday. The Canadian Dollar to Pound exchange rate is currently trending in the region of 0.5551.