Here is an overview of what’s been happening in the Currency Markets throughout July with the Canadian Dollar.
The CAD reversed initial losses, in spite of Canada’s economy contracting for a ninth consecutive month in April as the manufacturing, energy and retail industries scaled back activity in the deepest downturn since the early 1990’s. Gross domestic product fell 0.1% in the month compared with March, suggesting the economy is entering its third quarter of recession. While there were no surprises in the report – the results were in line with forecasts – it was still a disappointment to those looking for green shoots, or signs the economy is about to right itself. GDP shrank 3.0% from a year earlier and in CAD terms, total output was the lowest since October 2006.
In Canada job loss figures slowed from -42k to just -7k in June whilst the unemployment rate stretched up to 8.6% from 8.4%. The Canadian Trade data revealed a record deficit, reflecting the poor state of the US, Canada’s largest importer.
Canada’s economy contracted for a tenth straight month in May as weak global demand pummelled the energy and manufacturing sectors. Gross domestic product by industry fell 0.5% in May from April, worse than market forecasts of a 0.3% decline. GDP fell 3.5% from May 2008. The May downturn puts the economy on track for a second-quarterly decline of at least 3.0%. That would follow declines of 5.4% and 3.7% in the previous two quarters. The outturn means that the Bank of Canada is likely to follow through on its pledge to keep its benchmark interest rate at its current rock-bottom level until the end of June next year, conditional on inflation not spinning out of control.
Attention now shifts to Friday’s July employment figures, with the unemployment rate seen ticking up to 8.7% from 8.6%.
Current Central Bank Rates:
Canada (Bank of): 0.25% (Next Meeting 10th September)
UK (Bank of England): 0.50% (Next Meeting 6th August)
Highs & Lows of July:
Movement of 8.04%
Difference this would make on £200k
High: 383,140 CAD
Low: 354,620 CAD
A difference of 28,520 CAD
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Director - HiFX