Losses Forecast for Pound Sterling Canadian Dollar Exchange Rate GBP CAD

May 26, 2015 - Written by John Cameron

STORY LINK Losses Forecast for Pound Sterling Canadian Dollar Exchange Rate GBP CAD

The latest data from the Commodity Futures Trading Commission (CFTC), published on Friday afternoon, revealed that speculative traders in the global currency markets had once again decreased their bets that the Dollar would strengthen against the other majors. The official figures, which covered the week leading up to 19th May, showed that speculators had cut their up-bets on the Buck from $29.11bn the week before to a relatively lowly $25.81 thanks to decreased expectations of a Federal Reserve interest rate hike in the near-term.

Meanwhile, the CFTC figures also revealed that investors’ attitude towards the Pound Sterling (currency:GBP) had sweetened, with the number of short bets on the UK unit dropping from 68,280 to 64,494 at the latest count. The improvement of sentiment towards Sterling was driven by the unexpected outright victory by the Conservatives in the British General Election of 7th May and the data suggests that the Pound-positive effect of this result may not yet have completely filtered through.

Another notable revelation from the CFTC figures pointed to a sea change in speculators’ attitudes to the Canadian Dollar (currency:CAD). The previous week had seen investors adopt a net short stance towards the Loonie but the latest numbers revealed that speculators are now marginally net long on the Canadian tender versus the Greenback. The continued drift higher for global oil prices in combination with the firm tone of recent Canadian data releases appeared to behind the move. Analysts now forecast that the Loonie may perform on a positive footing moving forward.

Looking ahead to this week’s session, market participants won’t have to wait long to receive further direction on the US Dollar. This afternoon’s American Durable Goods Orders data is always closely watched and with the consensus expectation being for a -0.5% showing, the result would not have to be great to provide the Buck with some near-term support. Tomorrow’s Bank of Canada (BoC) monetary policy decision is the next tier one risk event of note. An interest rate hike is considered unlikely from the BoC, but the tone of its rhetoric could prove market-moving for the Loonie.

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TAGS: American Dollar Forecasts Canadian Dollar Forecasts Currency Predict Forecasts