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CAD Good value short-term
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Tuesday, 24 February 2009 |
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The Canadian Dollar came under some selling pressure throughout last week, with fears over the global economic outlook and lower commodity prices (particularly oil prices, which fell by about 5%) weighing on the currency. The Loonie is heavily affected by movements in the prices of commodities, especially oil, of which it is one of the largest exporters in the world. As such any continuation of this slide in oil prices could have, at least for the short-term, a positive impact on the value of Sterling against the CAD.
Further to this, inflation in Canada is well below target, which has triggered speculation that The Bank of Canada will look to cut rates even further, damaging news given that the base rate currently sits at just 1%. Regular readers will be aware that this, in theory, will weaken a currency as investors shift funds elsewhere in order to increase their yield. The only notable domestic data release this week from Canada is Monday's retail sales report, with further declines in consumer spending widely anticipated.
Considering the rare possibility that we may see some sterling strength, it may be wise to speak with your EMYC account manager about the benefits of Limit Orders in order to ensure you make the most of your FX requirement.
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