Best Canadian Dollar Rates - CAD/USD Exchange Rate Hits Yearly High, Softer vs Pound (GBP) & Euro (EUR)

September 1, 2014 - Written by James Fuller

STORY LINK Best Canadian Dollar Rates - CAD/USD Exchange Rate Hits Yearly High, Softer vs Pound (GBP) & Euro (EUR)

The Canadian Dollar to Dollar exchange rate (CAD/USD) strengthened to reach its best level in over a year over tlast weekend and was holding onto those gains on Monday due to low volume USD trading because of US markets being closed for the Labour Day National Holiday.

The ‘Loonie’ found strong support on Friday after economic data showed that economic growth in the North American country rebounded by its best pace in close to three years in the second quarter of 2014.

A sharp increase in exports and an improvement in domestic spending were the main factors for the improving GDP figures.

Let's look at the key forex pairs for today:

- The Canadian Dollar to Australian Dollar exchange rate is trading up +0.04% at 0.98587 CAD/AUD.
- The Canadian Dollar to Euro exchange rate is trading up +0.05% at 0.70073 CAD/EUR.
- The Canadian Dollar to Pound exchange rate is trading down -0.03% at 0.55397 CAD/GBP.
- The Canadian Dollar to New Zealand Dollar exchange rate is trading down -0.22% at 1.09814 CAD/NZD.
- The Canadian Dollar to US Dollar exchange rate is trading up +0.08% at 0.92011 CAD/USD.

According to the GDP data published by Statistics Canada, the Canadian economy rebounded after GDP increased by 3.1% at an annualised pace in the second quarter, the figure beat economist expectations for a GDP increase of 2.7%. The main cause for the better than forecast figure was a 17.8% surge in exports and as household spending increased by 3.8%.

‘Even though the headline data came in stronger than the market was expecting, it wasn’t that much stronger that it’s going to cause the Canadian Dollar to appreciate too much. We had a little bit of a move down to the lows we’ve seen recently,’ said a forex trader from the Bank of Nova Scotia.

Despite the one-year, high economists are forecasting that it will not be long before the Canadian Dollar begins to give up ground against its US counterpart. Continually positive economic data releases out of the United States are increasing the likelihood that the Federal

Reserve will end its monthly quantitative easing programme and hike interest rates earlier than previously forecast. If that happens then we can expect the US Dollar (USD) to surge against the Pound Sterling (GBP), Euro (EUR) and Canbadian Dollar (CAD) exchange rates.

Against the Pound the ‘Loonie’ softened as the UK, currency found support from another bout of disappointing data out of the Eurozone and concerns over an escalation in the conflict in Ukraine.

The market widely shrugged off a report by the EEF trade association, which showed that it expects the UK’s manufacturing sector to have slowed last month.

The EEF now expects the manufacturing sector to grow by 3.3% in 2014, down from its previous forecast of 3.5%.

"UK manufacturing cannot insulate itself from global market conditions and this is clearly shown in the dip in output," said Tom Lawton, head of manufacturing at accountancy firm BDO, which helped with the survey.

The EEF prediction was confirmed after the latest Markit Manufacturing PMI data showed a slip from a reading of 55.4 to 52.5. Despite that the Pound was holding its earlier gains.

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