CAD release of Q4 GDP figures

Thursday, 05 March 2009

The market was relatively placid last week for GBP/CAD, fluctuating broadly within a 4 point range, and with it ending the week virtually where it began. The only data of significance released was a much bigger than expected decline in Canadian retail sales in December, which briefly gave the Pound a boost, however this was short lived following a bout of Sterling weakness.

Looking to the week ahead, Canada sees the release of Q4 GDP figures which is expected to show that year on year the economy shrank by 3.6 percent. If this is the case it will be the biggest drop in 18 years and dispels any discussion that Canada is fairing better than other economies in this Global recession.

All eyes are focused on the Bank of Canada’s interest rate decision on Tuesday, with consensus expectation of a 0.5% cut to 0.5%. With a cut in interest rates it is possible that we could see further losses for the CAD against a basket of currencies, including the Pound, as Canada becomes a less attractive proposition for investor to place their funds. However, with such a consensus, it is more than likely that the decision will have already been priced in to the market. Speak to your EMYC Account Manager for up to date market information.

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