The Canadian Dollar has had a rocky start to the weak so far, it dramatically weakened at the start of this week following news that China and Germany reported weaker than anticipated trade figures.
These weak figures indicated that global demand could be starting to cool, only a short time after the Bank of Canada chose to raise interest rates at their last monetary policy meeting. If global trade starts to cool, commodity based currencies such as the Canadian Dollar could be heavily impacted.
Potential conflict stirs movement towards ‘safe haven’ currencies
One of the main talking point and possible mover for the currency at the minute is the possibility of conflict between America and North Korea. During times of uncertainty, commodity currencies such as the Canadian Dollar will be sold as investors look to protect themselves and move to ‘safe haven’ currencies. As we have seen today, the Japanese Yen with its ‘safe haven’ status has performed extremely well overnight. I wouldn’t be surprised to see the Loonie lose value over the coming days as a result of this news.
Oil prices hitting Canadian Dollar value
Furthermore, the price of oil dropped below $50 per barrel this week, weakening the Canadian Dollar. with Oil being so heavily linked to the price of the Canadian Dollar, it has been losing value following news that other oil exporting countries have started to increase their production.
There are no major economic events for the Canadian Dollar due to be released this week, so I would mainly expect to see the Loonie’s value largely impacted by global events. My prediction for this week is for the Canadian Dollar to continue a downward trend.