Canadian Dollar - Canada?s Government Budget Surplus Weakens, GBP/CAD Rises

August 25, 2017 - Written by John Cameron

STORY LINK Canadian Dollar - Canada?s Government Budget Surplus Weakens, GBP/CAD Rises

The pound to Canadian dollar exchange rate GBPCAD gained on Friday's foreign exchange markets reacted to news from this year’s Jackson Hole economic symposium and a severe drop in Canada’s government budget value.

Federal Reserve Chair Janet Yellen took to the stage to discuss financial stability at this year’s symposium, and, much to the disappointment of USD traders, she stuck strictly to the subject matter, refusing to offer any insight into monetary policy.

Market demand for both the US Dollar and, oddly enough the Canadian Dollar abruptly descended on this news, perhaps amplified due to a shortage of data releases and domestic events.

The Pound also reversed some of this week’s losses against the Canadian Dollar as a result of traders favouring Sterling, especially as the Euro’s movements remain questionable until tonight’s speech by European Central Bank President Mario Draghi has passed.

Canada’s Government Budget Surplus Weakens, CAD Falls

The only notable data release relating to the Canadian Dollar today was Canada’s government budget value figure, which was demonstrated to have significantly dropped in June 2017, from C$0.38b million in the same month, previous year, to a paltry C$0.02B.

Whilst this figure was better than the forecast of C$01.6B, it remained a sizable drop – enough to cause concern and cement the Pound’s lead as the trading week draws to a close.

Crude Oil Prices Bolstered by Hurricane Harvey, CAD Unresponsive

Oil prices rose today in response to the imminent arrival of hurricane Harvey, a category 2 storm that will hit the mainland United States.

Various oil refineries have temporarily shut down operations in response, with the storm’s path directly affecting oil refinery hotbeds. Understandably these closures, and the threat that the storm poses to long term production from said refineries, has driven the price of crude oil up.

The Canadian Dollar, however, has been slow to respond, instead continuing to slide in the wake of events at Jackson Hole and the weakening Canadian government budget.

GBP CAD Forecast: Brexit and CA GDP Liable to Cause Volatility

The forecast for this pairing remains mixed. On one hand, the resumption of Brexit negotiations could cause a great deal of volatility for the Pound, though if they proceed at a rate faster than expected then Sterling could well find its feet. On the other, the Pound could be hindered by continued stagnation within negotiations, especially with data that week being quite sparse for the United Kingdom.

Towards the end of next week the Canadian gross domestic product (GDP) figures will be released for Q2, with the quarter-on-quarter figure predicted to drop to 0.7% from the previous period’s 0.9%. In addition, the annualised figure is forecast to also flop, coming in at 3%, down from 3.7%.

If this materialises then the Pound Canadian Dollar exchange rate could climb even higher, though that remains heavily dependent on progress made towards Brexit.

International Money Transfer? Ask our resident FX expert a money transfer question or try John's new, free, no-obligation personal service! ,where he helps every step of the way, ensuring you get the best exchange rates on your currency requirements.

TAGS: Canadian Dollar Forecasts Currency Predictions Pound Canad Forecasts