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    Canadian Dollar in the Spotlight After Surging to 16-Week High

    Lifted by oil, economic data and the Fed, the Canadian dollar has soared against the US dollar to a 16-week high and has reached even more impressive milestones against the pound, euro and Australian dollar.

    Updated: Jun 20, 2019  

    The Canadian dollar has been the star of the past 48 hours. With oil prices up 10 percent since Monday and new data showing a big jump in Canadian inflation at a time when other major economies are faltering, it was only natural for currency traders to favour Canadian dollars on Wednesday and Thursday, forcing valuations higher.

    Moreover, with pressure piled on to the US dollar following Wednesday’s admission by the Federal Reserve that the “case for [rate cuts] has strengthened,” the way was clear for CAD appreciation and buyers didn’t hold back.

    The loonie has risen sharply to a 16-week high against the US dollar, at $0.76, and has reached its highest levels since the fourth quarter of last year against the British pound, euro, Australian dollar and New Zealand dollar.

    Against the Australian dollar, such has been the loonie’s recent appreciation — at A$1.096, CAD/AUD is 5 percent higher than rates in mid-April — it’s now within a whisker of the important technical level of A$1.1, a level not seen since 2010.

    Recent economic data has seemingly vindicated analysts at Scotiabank, who went out on a limb a month ago when they said that Canada’s economic health was “way better” than described at the time by policymakers at the Bank of Canada. Scotiabank went on to label Canada’s currency as “egregiously undervalued.”

    Other reliable CAD forecasters include Citibank, which now foresees the currency buying US$0.77 in 6-12 months’ time, although Citi experts cite escalating trade tensions as a “major risk” to the forecast.

    On matters of trade, Canada will need to ratify the United States-Mexico-Canada Agreement (USMCA) now that the Mexican Senate has approved the deal. With roughly 80 percent of Canadian exports going south of the border, FX markets will take a grim view of things should there be a long wait for this NAFTA-replacement to be agreed.

    Posted under: #News #AUD #CAD #EUR #GBP #NZD #USD

    Disclaimer: Please note any provider recommendations, currency forecasts or any opinions of our authors should not be taken as a reference to buy or sell any financial product.