The Canadian Dollar has surged during this afternoon’s trading after better than expected Gross Domestic Product data and employment or labour data showed a more positive picture of the economy in Canada following a drop off earlier in the year.

Canadian Gross Domestic Product data

The Gross Domestic product data jumped up to 0.2%, 0.1% more than was expected in September. This followed
-0.1% for August when it dipped into negative territory.

Currently the Canadian economy isn’t performing as well as it was during the second quarter, however it is still positive news for the economy and ahead of analysts expectations. The main reason for the jump was put down to household consumption picking up. This data has helped to strengthen the Canadian Dollar (CAD).

All in all, the CAD could be set for a very strong start to 2018. Stronger than expected economic performance will support the possibility for further interest rate hikes in 2018, which will now be surely on the mind of Stephen Poloz, the Governor of the Bank of Canada (BoC) following the risk to oil prices seemingly being adverted for now.

OPEC agreement leads to rise in Oil prices

An agreement was reached between OPEC (the Organization of the Petroleum Exporting Countries) to keep caps in place throughout 2018. Oil today has been strengthening throughout the day, reaching a two and half year high.

As a major exporter of oil, any positive news for oil prices usually helps to strengthen the Canadian Dollar. What is more interesting is that with the agreement due to run throughout 2018, the pressures from the global economy and in particular oil will have subsided, which leads to investors hoping for a few Canadian interest rates hikes in 2018, which has helped to strengthen the CAD throughout today. The opposite is of course also true, if hope of an interest rate hike dips the CAD will likely weaken.