Canadian Dollar to US Dollar (CAD/USD) Exchange Rate Higher as Oil Prices Grow
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Wednesday has been an interesting day for the ‘Loonie’ as Canadian Retail Sales data bypassed economists’ forecasts of 0.6%, and instead reached 0.7% in May. April however saw Retail Sales attain 1.3%, so the Canadian Dollar should see support from beating economists expectations, despite not gaining as positive a figure as the previous month.
Auto sales were mainly responsible for the lift in retail sales, as Retail Sales Less Autos data fell further than anticipated, gaining only 0.1% despite forecasts of 0.3% in May, and the former 0.8% in April.
However Canadian interest rates have been widely discussed with the Governor for the Bank of Canada (BoC), Stephen Poloz, proving to be predictable in his dovish speeches in an attempt to contain the Canadian Dollar.
Economist Craig Alexander stated: ‘One can debate whether the Bank of Canada will tighten monetary policy before, in tandem, or after the Fed. But one cannot debate that higher rates in the US will also mean higher rates in Canada.’
The US Federal Reserve has come under close examination in recent months with speculation surrounding interest rate hikes.
The Chairwoman for the Fed, Janet Yellen, suggested recently that interest rate hikes would be reliant on US data releases, predominantly employment figures.
Therefore the Initial Jobless Claims and Continuing Claims data released on Thursday will prove of high influence for investors watching US figures closely.
Yellen however declined to conform to a set time frame or rule with regards to hiking rates stating: ‘It would be a grave mistake for the Fed to commit to conduct monetary policy according to a mathematical rule.’
However recent geopolitical events such as the conflict in Ukraine and the downing of the Malaysian Airlines passenger flight have also had an effect on the ‘Loonie’ as a commodity currency. The Canadian Dollar will gain support from oil prices rising as conflict in Ukraine continues.
The Canadian Dollar will now be subject to the outcome of such geo-political escalations, alongside other shifts in the currency market to determine any movement. The USD to CAD exchange rate is currently residing at 1.0722.