Canadian Dollar to Pound Sterling Weakens as China Data Weighs on Commodity Currencies

STORY LINK Canadian Dollar to Pound Sterling Weakens as China Data Weighs on Commodity Currencies

Canadian Dollar to Pound Sterling Weakens as China Data Weighs on Commodity Currencies

The Canadian Dollar to Pound Sterling exchange rate weakened following the release of worse than forecast trade balance data out of China. The world’s second largest economy is one of the world’s biggest importers of raw materials and as a result, the poor data increased fears that the global economy is slowing. Commodity based assets such as the Canadian Dollar, Australian Dollar and South African Rand were all weakened by the report.

Chinese exports were shown to have tumbled sharply in March after official data showed that exports declined by 14.6% from the year-ago period.
The National Bureau of Statistics cited weak global demand and the impact of the long Lunar new year holiday as factors behind the decline. The fall was well below economist expectations for a rise of 12%.

‘Put in USD terms, March imports fell 12.7%, above the street’s view of a 10% decline. Exports fell 15% relative to expectations of 9% growth. As a result we saw an absolute collapse in the trade balance and it must put the risks for this Wednesday’s Q1 GDP to the downside,’ said Chris Weston, chief market strategist at IG.

Imports were also shown to have tumbled by 12.3%, below the 11.7 expected by economists.

‘The real problem with China trade data like this is China doesn’t make economic revisions. So this is a little bit of a mea culpa, I believe, for that 45% export number that came out last month. That way overshot, I think this is a little bit of an under report,’ said Tony Nash, Vice President at Delta Economics.

The ‘Loonie’ weakened despite oil prices rising back towards the $60 per barrel level. Trade of the commodity is volatile as financial traders increased their bets that prices will rise over the coming weeks due to a slowdown in oil drilling in the USA.

‘We found a bit of a momentum this morning. The US rig count once again focused people’s minds on the imminent reduction of production. The market’s choosing to not focus on the ample supply we have at the moment,’ said the head of commodity strategy at Saxo Bank.

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The Canadian Dollar to Pound Sterling exchange rate will experience volatility on Tuesday due to the release of the latest UK inflation data. Canadian data is light this week but on Friday, the currency will see movement because of Canadian inflation and retail sales data.

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