Strong Canadian Economy Leads To Positive Outlook For The Canadian Dollar

trong Canadian Economy Leads To Positive Outlook For The Canadian Dollar - banknotes and coins of Canadian Dollar
Bill Cascade   NEW 10/08/2019 00:00:00 Forex

A recent Reuters poll predicts that the Canadian Dollar will grow stronger, especially against the US dollar courtesy of the currently strong Canadian economy.

The report represents great news for Canadian traders as it states that the Canadian Dollar will maintain a strong performance even as global trade plunges into economic uncertainty. The CAD peaked at 1.3016 against the greenback on July 19 before falling by 2% possibly due to declining oil prices.

Canada is a major oil exporter. The decline was also attributed to the mounting concerns about the China-U.S trade war.

The USD/CAD currency pair kicked off the week on an overall bullish trend until Wednesday when it peaked at around 1.3345 before turning bearish. The reversal was likely influenced by the interest rate cuts and the rising political-economic tensions between China and the U.S. The currency pair traded at around 1.3225 at the time of this press.

USD/CAD Forex Chart


The Canadian Dollar has been holding its own against the US dollar, and it looks like, the Canadian economy's positive performance will likely continue to support the currency. However, that does not mean that it is immune to the current uncertainties. The country is operating on a current account deficit, and it focuses heavily on commodities export, including oil. 

Canada is still at risk of being caught in the crosshairs in the ongoing trade war between China, and the U.S. Canada's current economic performance is strong enough to weather the storm, but it might end up being affected if the trade tensions continue to escalate. 

"We believe that current domestic conditions are stable within Canada and support the neutral stance by the Bank of Canada," stated Simon Harvey, a forex analyst for Monex Canada and Monex Europe.

More statistics from Canada's economy may further strengthen the CAD's position

Canada is scheduled to release its job report for July on Friday (today), and already there are a lot of positive expectations. The country's unemployment in June was extremely low at 5.5% while its annual inflation rate was in line with the 2% target set by the Bank of Canada.

The Canadian Central Bank decided to hold the benchmark interest rate at 1.75% in July, and it also announced that it does not plan to slash interest rates any time soon.

However, money markets anticipate a 25-basis-point rate by the Bank of Canada by the end of next year. Yet, that is little compared to the US Federal Reserve's expected easing by roughly 100 basis points.

The Canadian Dollar's outlook currently looks good, and many analysts share the same sentiment. A poll involving 40 currency analysts revealed that they expect the USD/CAD to rise to 1.31, which means the Loonie will be worth about 76.34 USD cents.

So far the Canadian Dollar has gained about 3% against the greenback since the start of 2019. Further weakness in the US dollar may lead to more gains for the Loonie in 2019. Analysts also expect oil prices to improve and also to start supporting the Canadian Dollar's performance in the future.





More articles

US Dollar Under Pressure On Weak Economic Data

Bill Cascade   NEW 09/10/2019 00:00:00 Forex

The US dollar is struggling for direction, having lost momentum on weak employment data. The greenback has registered impressive gains, in recent months, as other majors currencies continued to edge lower...

Buy to Open Definition, Explained in Detail with Example

Bill Cascade   NEW 08/10/2019 00:00:00 Guides

There are four types of options that are commonly used in the industry. Alongside buy to open, these include buy to close, sell to open and sell to close. Here we look at precisely what the basic definition of buy to open means, alongside offering an example of it at work. By analyzing the term further, we can provide a better understanding...

Swiss Franc Eyes Fresh Gains On Safe Haven Appeal

Bill Cascade   NEW 07/10/2019 00:00:00 Forex

The Swiss franc has lost some ground against other major currencies in recent trading sessions. For starters, it is trading at two-week lows against the Euro, which has tumbled to two-year lows in recent months. While the weakness of the Swiss franc stems from weak economic data, a bounce-back could be in the offing going forward...

Turkish Lira On The Recovery As Swedish Krona Woes Persist

Bill Cascade   NEW 06/10/2019 00:00:00 Forex

Turkey's government remains optimistic about the Lira appreciation, against the dollar, over the next three years. Economic forecasts by the finance ministry indicate the government expects the country’s economy to expand by 5% next year...

Argentines Turn To the Polls To Avert Economic Crisis And Peso Volatility

Bill Cascade   NEW 03/10/2019 00:00:00 Finance

The country is struggling with one of the highest levels of inflation at 54%. High inflation levels have affected the way of life, as prices of goods continue to rise, and small businesses struggle to remain afloat... 

Free margin - Credit